NOIDA (CoinChapter.com) — As the market stabilizes after a tumultuous March, traders are exploring alternative investments. Amidst this shift, many are gravitating towards established options, with XRP emerging as a notable preference. CoinChapter offers valuable insights to those contemplating an investment in Ripple’s token and informs their decision-making process.
XRP has not had a good year, especially compared to its peers.
In fact, the Ripple token has not charted a new high since its record level in December 2017. The firm’s legal tussle with the U.S. Securities and Exchange Commission made things difficult, but that started in December 2020. What has the token been doing for nearly three years since its last ATH?
XRP Fundamentals Suggest Buying Might NOT A Good Idea
CoinChapter’s Yashu Gola highlighted the various fundamentals of the XRP token (in Hindi, though) in a YouTube video. Let me translate that for you.
The analyst highlighted that XRP’s inherent price volatility makes the Ripple token a bad settlement option for cross-border payments. Despite several firms adopting XRP for cross-border remuneration, the token has somehow lost its utility.
Another problem with the token is its highly centralized nature. Of the total supply, Ripple controls nearly 80% of XRP tokens, which could make fans of decentralization think twice before buying XRP. Furthermore, the fintech firm releases the tokens monthly, increasing the supply.
Moreover, the blockchain has only 128 validators, which means any change governing Ripple and XRP could require only 128 votes. For perspective, Ethereum’s beacon chain has 1.33 million validators.
An increased supply often translates into a bearish signal if there isn’t a corresponding hike in demand. Gola noted that despite interest from institutional and retail investors, people are not planning to buy XRP tokens because of the number of legal issues its parent company faces.
The SEC lawsuit is ongoing, with the next hearing in May. As long as XRP’s legal status remains obscure, traders will avoid buying the Ripple token.
On-Chain Data Has Nothing Good For XRP
Meanwhile, on-chain data does not bode well for traders who plan to buy XRP in April.
Data from Messari shows that the number of XRP whale, shark, and shrimp wallets is dwindling, with the sharpest decline visible in the wallets holding more than 100,000 XRP tokens. The whale wallet addresses could include exchange wallets and might not be a clear indicator of market sentiment.
Interestingly, XRP wallets with 100,000 or fewer tokens are seeing their numbers decline, indicating that Ripple’s legal issues continue to hinder XRP’s growth. As such, it seems the consensus is that of abandoning the ship.
XRP Technicals Remain Bullish
Gola noted that the XRP price has some bullish technicals favoring the token. For instance, the analyst noted that the XRP/BTC pair has dropped to its lowest since May 2021. A stable or ascending Bitcoin price sets the stage for a potential rally in XRP/USD.
Additionally, with the upcoming Bitcoin halving in April, BTC price is likely to rally, which could result in traders diversifying their gains from Bitcoin into other tokens. As a result, XRP price could potentially spike about 35%-37% rally “by the end of April,” Gola opined in the video.
If BTC halving fuels a spike in XRP, the Ripple token could rally nearly 10% to the 0.382 FIB resistance near $0.632.
Flipping the above resistance could see traders buying the XRP token, helping it reach the resistance near $0.672. A move above the 0.67 resistance level would face resistance from the multi-month descending trendline resistance.
On the other hand, should XRP continue paring gains, the Ripple token will likely drop to support at around $0.56.
However, given XRP’s connection with BTC, the Ripply token would likely rally riding on BTC’s coattails. But traders should DYOR before investing.
