XRP (XRP), which hit a four-year low, appears to be on the verge of a comeback against its Bitcoin (BTC) trading pair. Fueling this bullish reversal is the appearance of a classic bullish pattern, a triple bottom formation.
XRP Aims for 30% Rebound Against Bitcoin
A triple bottom pattern is formed when price makes three distinct lows, all reaching similar price levels, indicating strong support.
After the third low is recorded, the price breaks through the neckline resistance level formed between the two lows and, according to the principles of technical analysis, rises to the maximum distance between the low of the pattern and the neckline.
As of July 12, the XRP/BTC pair was testing the neckline support of around 793 satoshis (1 satoshi = 0.00000001 BTC) for a potential breakout.
Additionally, the pair’s weekly Relative Strength Index (RSI) reading of around 36 suggests that XRP is undervalued relative to Bitcoin, which further increases its potential for recovery in the coming weeks. Nevertheless, a decisive close above 793 satoshis would likely see XRP/BTC reach its triple bottom target of around 1,055 satoshis.
Conversely, a pullback from the neckline resistance level, similar to a recent pullback in history, could push XRP/BTC towards a local floor of 664 satoshis by August, which would be over 15% down from current prices.
Bitcoin Drops 20%, XRP Price Gains
XRP’s resurgence against Bitcoin is largely due to the German government’s relentless selling of its BTC holdings in July. For reference, government-related wallets have seen a net loss of 46,200 BTC since mid-June, which is equivalent to $2.69 billion in selling pressure.
Additionally, with over 140,000 BTC being repaid to Mt. Gox creditors on an ongoing basis, traders’ interest in Bitcoin has waned, and XRP/BTC has risen by over 20% in July.
Related: Dip Buy? Bitcoin Institutional Investors Add 100K BTC in One Week
Bitcoin’s overall dominance has fallen from its all-time high of 55.46% a week ago to 54.55% on July 12, suggesting that traders may be turning to altcoins during the ongoing BTC price consolidation period.
Broadly speaking, XRP has been relatively underperforming compared to most of the top crypto assets so far in 2024, with a year-to-date return of -26.50%.
The weekly RSI for XRP/BTC is bouncing back after reaching a two-year low of 33, just 3 points above the sell-off threshold. Historically, the last time XRP’s weekly RSI reached 33, it was followed by an impressive 194% rally, suggesting that a significant upside move is likely.
By comparison, BTC’s weekly relative strength is in a correction mode, having fallen from a very overbought level of 88 in March to a neutral level of 45.50 as of July 12.
This decline indicates that Bitcoin’s bullish momentum has weakened significantly over the past two months, which could benefit “underbought” large-cap altcoins like XRP in the coming weeks. XRP could also benefit from the growing buzz around the “inevitable” ETF launch.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.