Like the broader crypto market, XRP’s relief bounce after the 05 February crash is being met with some caution. The altcoin slipped to a yearly low of $1.1, but soon recovered by 30% to $1.4.
With two immediate overhead hurdles, will key U.S economic data scheduled for Wednesday and Friday offer an extra boost for near-term bulls?
XRP price prediction – A V recovery or ‘dead cat bounce’?’
On the price charts, XRP’s 30% rebound after the sharp decline in early February formed what seemed to be a V-shaped recovery. These are rebounds after sharp drawdowns boosted by sentiment shift, strong buying power, and renewed inflows.
However, if fundamentals do not change and volumes remain low or stagnate, the relief bounce could end up retracing into new price lows – Such a scenario is called a dead cat bounce.
Source: XRP/USDT, TradingView
For XRP, the rally was fueled by a strong volume surge, and the MACD, a key momentum shift indicator, flashing a positive signal after printing a golden cross. Besides, the drop retested the October crash, which could offer a strong base for recovery.
If the momentum extends, then bulls could clear the $1.6 (red) and $1.8 (white) overhead hurdles. That would translate to potential gains of 10% and 30%, respectively, if the levels are hit.
However, the RSI was still below average, at least at press time, to confirm the positive shift.
In fact, the whale selling pressure and overall market caution meant that the ‘dead cat bounce’ scenario couldn’t be overruled yet.
Notably, the 30-Day Moving Average (DMA), which tracks whales’ buying or selling pressure, has been negative since July. Although whale pressure has eased since by half, from $33 million to $15 million since January, a strong inflow could boost recovery odds.
Source: CryptoQuant
Less than 6% chance of XRP reclaiming $2
Meanwhile, sophisticated players remain extremely cautious about the altcoin’s near-term outlook, despite the double-digit rebound.
According to Options data, the market sentiment is negative for the rest of February’s Options expiries.
Source: Amberdata
This can be illustrated by the 25-Delta Risk Reversal (25RR). At the time of writing, it was negative with readings between -7 and -10 for the next Options expiries. Here, it alluded to greater demand for puts (hedging against downside risk) than for calls (bullish bets).
Unless the metric flips to neutral (zero) or positive, the relief rally could end up being a ‘dead cat bounce.’
In fact, the Option traders seemed to be so pessimistic about XRP reclaiming $2 this month that they priced only a 5.6% chance for such a move.
Source: Deribit
Final Thoughts
- XRP’s 30% price rebound in February was fueled by easing whale selling pressure.
- However, Options traders remain extremely cautious and believe there’s less than a 6% chance of XRP reclaiming $2.
Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion
Source: https://ambcrypto.com/xrp-price-prediction-odds-of-hitting-the-2-level-in-february-are/
