Bearish View
Sell the XRP/USD and set a take-profit at $0.6462.
Add a stop-loss at $0.8630.
Timeline: 1-2 days.
Bullish View
Set a buy-stop at $0.7925 and a take-profit at $0.8350.
Add a stop-loss at $0.6462.
The XRP price has been under intense pressure in the past few months as concerns about a hawkish Federal Reserve remain. Ripple is trading at $0.7440, which is about 62% below its highest level in 2021. Its total market capitalization has declined to about $35 billion, making it the 8th biggest cryptocurrency in the world.
Rotation to Value
The financial market is seeing an overall rotation from growth to value or from risky assets to relatively stable ones. A good example of this is in the stock market, where the tech-heavy Nasdaq 100 index has crashed while the Dow Jones has held steady.
The same trend has happened in the cryptocurrency industry. Cryptocurrencies are considered risky assets because of their volatility and overall lack of utility value. This year alone, all cryptocurrencies tracked by CoinGecko have shed hundreds of billions of value. The decline has been across the board, with Bitcoin and Ethereum declining sharply.
The decline of the XRP and other cryptocurrencies is mostly because of the rising concerns about the Federal Reserve and other central banks. While the number of Covid-19 cases have risen globally, many central banks are now set to embrace a more hawkish tone in a bid to stem the rising inflation.
In the United States, the headline consumer price index (CPI) has risen to more than 6%. As the Omicron cases rise, there is a possibility that prices will increase. At the same time, the country’s labour market is still strong considering that the unemployment rate has retreated to about 3.9%.
Therefore, this situation is perfect for Fed tightening. As such, analysts worry that risky assets that thrived during an era of low-interest rates will struggle as interest rates start to rise. Another key catalyst for the XRP price will be the upcoming decision on the SEC vs Ripple Labs case that is expected later this year.
XRP/USD Forecast
The daily chart shows that the XRP price has been under intense pressure in the past few months. A closer look shows that the sell-off intensified when the coin formed a double-top pattern at $1.3577. It then crossed the chin of this pattern at $0.8630. It remains below the 25-day and 50-day moving averages while the Stochastic Oscillator has moved close to the oversold level.
Therefore, the path of the least resistance for the XRP/USD pair is lower, with the next key level being at $0.6462, which was the lowest level on December 4th.
