Ripple (XRP) is experiencing a stall after an incredible six-week price surge. The main reason is believed to be profit-taking activity that has slowed the rise of this altcoin to $3.
On December 16, the price dropped 2% to a daily low of $2.3 in a corrective trend that began after reaching a peak of $2.9 on December 3. Consequently, XRP prices have decreased nearly 18% after tripling in the past six weeks.
The hype surrounding the RLUSD stablecoin is driving up XRP prices.
XRP is gaining more attention, not only due to its outstanding performance in recent weeks but also because of developments in the XRP Ledger (XRPL) ecosystem, including the upcoming launch of the stablecoin RLUSD.
Pegged at a 1:1 exchange rate with the US dollar, RLUSD will launch on the XRPL and Ethereum blockchains, backed by cash reserves and US Treasury bonds. RLUSD requires transaction fees paid in XRP.
According to Georgios Vlachos – co-founder of Axelar, after the New York Department of Financial Services (NYDFS) approval, this stablecoin could be widely used for trading and savings, especially in emerging economies.
Vlachos notes that this will significantly boost the adoption of XRP as a payment token by 2025. Axelar's interactive platform also connects XRPL to 69 other blockchains, allowing for seamless integration.
Meanwhile, Ripple's Chief Technology Officer David Schwartz has warned investors about supply constraints and price volatility that may occur with RLUSD upon its launch.
Schwartz also responded to concerns that pre-launch incentives seem to be driving up the value of RLUSD. Instead of reflecting the actual market value, such high bid prices indicate that many people are seeking novelty by holding the first RLUSD tokens.
Ripple's management confirms that as supply and demand return to normal, the price of the stablecoin will stabilize close to $1 as planned, despite these anticipated fluctuations.
XRP OI remains high.
Expectations for a cryptocurrency-friendly regulatory environment under President Trump and the upcoming launch of RLUSD have fueled growth in XRP-denominated futures contracts. Evidence of this is the open interest (OI)* skyrocketing to a record high on December 3.
OI is an important metric that traders and analysts use to gauge market sentiment and predict future price movements.
XRP OI | Source: CoinGlass
Higher OI implies that more money is flowing into the market, increasing the likelihood that this trend will continue.
The giant bullish flag of XRP is targeting $15.
Additionally, XRP prices are expected to continue their current upward trend despite any corrective moves as the chart is forming a classic technical structure with bullish prospects.
Known as a 'bull flag', this pattern forms when prices consolidate lower in a descending channel (the flag) after a strong upward move (the flagpole). Eventually, prices break above the upper trendline of the channel, often rising by the height of the flagpole.
Daily XRP chart and bullish flag pattern | Source: TradingView
The recent price action of XRP has formed a bullish flag pattern, as shown in the chart above. Therefore, the next bullish target is the height of the flagpole, reaching around $15, which is over 520% higher than the current price.
*OI (open interest) is a measure of the total value of all open futures contracts or 'unsettled' contracts on exchanges, and at the same time, it is an indicator of market bullishness as well as trader sentiment around a specific asset.
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