Key Takeaways:
- XRP will form a golden cross this week.
- But the token’s previous formation of the same indicator became a selloff event.
- The 2023 is slightly different, however.
YEREVAN (CoinChapter.com) — XRP is close to forming a “golden cross” — a widely-observed chart indicator among technical analysts for its bullish characteristics — on its weekly chart. However, recent history shows that XRP price has underperformed severely after painting the indicator.
XRP’s Previous Golden Cross Preceded a 70% Price Crash
XRP’s previous golden cross appeared in December 2020, when the US Securities and Exchange Commission (SEC) called the token “security” in its lawsuit against Ripple Labs, a San Francisco-based blockchain payment company.
The negative fundamentals overpowered the positive technicals, causing the XRP price to drop over 70% by 2020’s end. Nonetheless, as of August 2023, Ripple has partially won the lawsuit, asserting that its XRP sales on centralized exchanges did not break the SEC’s securities law.
So could XRP undergo a similar downturn in 2023 after its golden cross formation, according to fractal analysis? Let’s dwell.
XRP Price Prediction 2023
Golden Crosses are lagging bullish indicators, meaning they appear majorly after a strong price recovery, but do not guarantee an upside continuation trend afterward. As a result, XRP shows the possibility of a price correction in the future, albeit not necessarily a 70% price crash.
In fact, the next downside target for XRP appears to be around its 50-week exponential moving average (50-week EMA; the red wave) near $0.583, down about 20% from the current price levels.
Fundamentally, this correction could occur due to newer legal interpretations of the SEC vs. Ripple case, with the US regulator now appealing against Ripple’s win by comparing XRP with Terra, a $40 billion project that collapsed in May 2022.
An appeal is not even close to be a setback. First, it will be two years from now before a decision is issued by the 2nd Circuit, if it’s appealed. The Torres Decision is the law until then – at least in the 2nd Circuit. Second, even if the 2nd Circuit said Torres was wrong… https://t.co/GzW31D9edQ
— John E Deaton (@JohnEDeaton1) July 22, 2023
In addition, weaker macro fundamentals, including the Federal Reserve’s potential rate hikes and a stronger US dollar, could prompt XRP prices lower alongside the rest of the crypto market. Either way, the XRP price correction should not be as bad as it was in December 2020.
The Bullish Case
On-chain indicators tracking the XRP supply distribution across its richest investors show accumulation.
Notably, the supply held by addresses holding between 10 million and 100 million XRP tokens has increased in 2023. That coincides with the drop in the supply held by the 1 million-10 million tokens cohort, showing that most whales have increased their XRP exposure.
Nonetheless, accumulation is a belief, not an indicator. There’s a likelihood that whales start locking their profits if the XRP’s 2023 price rally enters a strong correction mode. Traders’ discretion is advised.
