Since retesting its psychological support at $2 on Dec. 20, XRP (XRP) has consolidated between $2.40 and $2.13 over the past week, coiling for a breakout in either direction.
While the high-time frame (HTF) structure remains bullish, one analyst explained why the altcoin must close a position above $2.30 in the short term.
XRP has “buy wall” until $2.23, says analyst
With XRP oscillating between a narrow price gap, CW, an anonymous crypto data analyst, said that a buy wall in the short term currently supports the altcoin.
This buy wall was between $2.20 and $2.23, and the altcoin’s inability to hold position above this range may lead to further drawdowns. The analyst said,
“If the price is supported, the $XRP will rise. If the support fails, it is likely to fall to the lower line.”
Meanwhile, Dom, a crypto trader, explained that XRP’s spot buyers are bidding again on Kraken and Bitfinex, with the altcoin exhibiting better strength than other crypto assets. Last week, the spot market buyers were active on Coinbase and Bitstamp, which allowed XRP to maintain a position above $2.20.
XRP price analysis by Dom. Source: X.com
However, the trader believed that XRP is still “not out of the woods” and said,
“We need acceptance back into $2.30s to be in safer territory.”
Related: Binance Bitcoin reserves hit January levels — months before BTC jumped 90%
XRP open interest drops 54% in 3 weeks
While XRP has piqued the spot market’s attention, its futures market painted a different picture. Data from CoinGlass highlighted that its open interest declined from $4.23 billion on Dec. 3 to $1.95 billion on Dec. 26, a 54% drop.
XRP’s open interest chart. Source: CoinGlass
Such a significant drop during the holiday season implies that liquidity is running thin in XRP’s futures market, which may be a double-edged sword. With the crypto asset at a critical level, prices may be more volatile than expected.
XRP 1-day chart. Source: Cointelegraph/TradingView
From a technical perspective, forming a symmetrical triangle strengthens the above argument. As observed on the 1-day chart, XRP’s price is likely to breakout or breakdown once volatility kicks in, and with liquidity levels (upside and downside) presented on both sides. A symmetrical triangle presents an equal probability between a bullish or bearish outcome.
Thus, in line with the earlier analysis, a quick recovery above $2.30 may trigger a swing toward a pattern high at $2.95. However, failure to maintain support may lead to a new swing low at $1.85, which was previously witnessed on Dec. 1.
Related: Price analysis 12/25: BTC, ETH, XRP, SOL, BNB, DOGE, ADA, AVAX, LINK, TON
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
