by Jamie Holmes
The altcoin ripple (XRP), which has the fourth largest market capitalization in the cryptocurrency market, has soared to near highs near $0.50 on December 13, following bitcoin, litecoin and ethereum higher as they pierce critical psychological levels. XRP has attracted more than $3 billion in volume over the past 24 hours, gaining more than 70 percent in value.
The appreciation of XRP comes close on the heels of the announcement that 55 billion of the total supply of XRP will be locked up in escrow. On December 7, the Ripple team stated, “By securing the lion’s share of XRP in escrow, people can now mathematically verify the maximum supply that can enter the market. While Ripple has proved to be a responsible steward of XRP supply for almost five years – and has clearly demonstrated a tremendous track record of investing in and supporting the XRP ecosystem – this lockup eliminates any concern that Ripple could flood the market.”
Another positive fundamental driving XRP’s price action is the increasing adoption by financial institutions. BTCManager previously reported on the uptake of Ripple by Japanese banks in April, and the Japan Bank Consortium (JBC) is moving toward production-ready phase.
Ripple’s director of joint venture partnerships, Emi Yoshikawa, stated, “JBC’s progress to become production-ready is the culmination of the Ripple team’s ingenuity and dedication to modernizing payment systems, and the consortium’s desire to improve the settlement process. Now Japanese banks will be able to further their reach into RippleNet and easily connect to other banks.”
On December 15, banks in Japan and South Korea will trial blockchain payments with Ripple’s technology, hoping to slash costs by as much as 30 percent. A group of 61 Japanese banks, led by SBI Holdings, along with South Korean financial firms, will conduct the test and possibly roll out payments as early as Spring 2018. The cross-border trials will last until January 31, 2018.
The weekly price action for XRP-USD on the Bitstamp exchange is shown below. This week, the market moved above the previous all-time high at $0.39887 and currently trades near $0.47. Notice this week; we see the Market Facilitation Index (MFI) is green, suggesting traders should go with the flow, as more fresh volume is incoming. The MFI indicates the upward move will be sustained. Also, it looks as if a bullish Marubozu will form for the week ending December 17, so on the weekly close, we look to confirm this candlestick pattern and then set buy orders at the base ($0.22598) and 50 percent level of the candlestick.
XRP-USD (Bitstamp, Weekly)
A weekly close above $0.39887 will give further bullish confirmation, as a break of the fractal sell level will point to an upward move by XRP-USD to find a new price ceiling.
The 2-hour price action shows that XRP-USD may test $0.40 before continuing the move higher. For instance, notice the conversion line indicates short-term equilibrium around $0.40 and the indicator is moving higher. The recent high at $0.47745 looks to form a fractal resistance, with the most recent fractal support at $0.333; therefore, on the 2-hour timeframe, we look for XRP-USD to test support provided by the conversion line (blue) before entering into a long position.
XRP-USD (Bitstamp, 2-hour)
Against bitcoin, XRP looks to reverse the long-term downtrend. The daily price action shows that XRP-BTC has managed to push above the conversion (blue) and base (red) lines, suggesting upward momentum will begin to have the upper hand. We anticipate XRP-BTC to test the flat upper span of the red Ichimoku cloud, that is around 0.00004255. The conversion line also looks to cross above the base line, which will give a weak bullish signal.
XRP-BTC (Poloniex, Daily)
We are also seeing a divergence in the price action, which is making lower lows, while the Awesome Oscillator is making higher lows, suggesting an imminent bullish trend. The oscillator has also turned green on December 12, indicating bears are losing their grip on the market.
Ripple, frequently criticized in the crypto community for its centralized approach, will have its hands full despite the progress made, with stiff competition from Stellar and NEM. These networks are also marrying blockchain-powered payment networks with complementary, existing financial and technological infrastructures.
The author does not own XRP and does not plan any positions in the next 48 hours.