XRP has maintained a mostly sideways trading pattern over the past week. It faces resistance at $3.34 while finding support at $3.11.
However, new on-chain readings suggest that the altcoin may be quietly preparing for a significant upward movement. This analysis contains the details.
Selling pressure on XRP has eased.
According to Glassnode, the circulating supply of XRP held on central exchanges has declined in recent days. Now at a monthly low of 5.66%, it has decreased by 3% since August 9.
When the circulating supply of an asset on central exchanges declines, fewer tokens are available for immediate sale. This decrease in exchange balances indicates that investors are moving their holdings into long-term storage, reflecting increased confidence in the future price performance of the asset.
For XRP, the drop to a monthly low indicates that selling pressure is easing. This is significant given the current sideways trend of the coin, as a decrease in selling liquidity may create conditions for a near-term breakout.
Furthermore, XRP's liquidity map shows a dense concentration of capital above the current price level, at $3.40.
Liquidation maps identify price areas where groups of leveraged positions are likely to be liquidated. Historically, these capital groups attract short-term bullish momentum as traders seek to exploit these liquidity areas.
Therefore, this could act as a price magnet, pushing XRP upwards to trigger the liquidation and fill these orders.
XRP is looking to rise to $3.66 as the market faces retracement pressures.
The wider market decline today has caused XRP to trade near support at $3.11. A strengthening bullish bias could lead to an upward trend towards $3.34. A successful breakout of this barrier could open the door for extended gains to $3.66.
On the other hand, if the support level that maintains the consolidation of XRP fails and the currency drops below the channel, bearish momentum may take over.
In such a scenario, the price of XRP may drop below the key psychological level of $3. It may even test $2.98 before finding some balance.
