Ripple (XRP) price is hovering above $0.50 on Friday, January 26th, with monthly losses approaching 20% and market indicators indicating that a rebound phase is imminent.
After hitting a high of $0.63 on the opening day of 2024, the price of
However, important market signals show that the sixth-largest cryptocurrency asset by market capitalization could now face a major rebound phase.
After a month of retracements, XRP is approaching oversold territory.
XRP holders experienced a 19% price correction between January 1 and January 26. The negative performance was due to controversy surrounding Ripple’s long-running legal battle with the U.S. Securities and Exchange Commission (SEC). The same goes for the overall lukewarm sentiment that has gripped the cryptocurrency market following the approval of the Bitcoin ETF.
However, after a month-long correction phase, market indicators now suggest that XRP is approaching oversold territory and could be on the verge of an imminent rebound.
The Relative Strength Index (RSI) is a technical indicator used in financial markets to evaluate the magnitude and speed of recent price changes, helping traders identify overbought or oversold conditions in an asset. It is measured on a scale from 0 to 100, with values above 70 indicating overbought conditions and below 30 indicating oversold conditions.
On January 26, the XRP Relative Strength Index (RSI) technical indicator fell below the 30 threshold, suggesting a local bottom had been reached.
When an asset approaches oversold territory, a strategic investor may think it is the perfect time to buy at the bottom. This rapid inflow of money unintentionally triggers a rebound.
If you look closely at the chart above, you can see that September 11, 2023 was the last day that the XRP RSI fell below 30. And especially before the end of the month, double-digit price gains quickly followed.
If this pattern repeats, the XRP price could experience a significant rise in the coming weeks.
On-chain signals suggest that XRP market cap is currently underestimated.
Network value to transaction ratio is another important market signal that highlights XRP’s current undervalued status. This indicator compares the market capitalization of an asset to the economic value of transactions currently executing on the network.
According to the latest data collected by Santiment, the XRP Network Value to Transaction Ratio (NVT Ratio) is currently at 62.1, the lowest this month. This is a key indicator that XRP market cap is underestimated relative to the level of transactions currently executing on the network.
In general, a decline in the NVT ratio during a downward price trend indicates that the price decline was not driven by a corresponding deterioration in network usage and underlying growth drivers.
As observed above, a sharp decline in the NVT ratio suggests that the underlying asset is currently undervalued relative to its current economic utility. This scenario often occurs during periods of widespread negative speculative trading and bearish sentiment across the market.
XRP Price Prediction: Bulls Could Target 20% Rise
In summary, both RSI and NVT ratios indicate that XRP price is approaching oversold territory. In the current situation, the majority of current holders are unlikely to sell as the margin for loss widens, while strategic new entrants may find it the perfect time to buy at the bottom.
The combination of these data-driven factors could push XRP price into a major rally towards $0.60 in the coming weeks.
Bollinger Bands technical indicators also confirm this positive outlook. Currently, the price of XRP is approaching a major reversal point at $0.50, which is the lower Bollinger Band.
If bulls can bounce back as expected, XRP price could reach the 20-day simple moving average (SMA) of $0.56 before facing significant resistance. A decisive break above that area would see the XRP price rise 20% to $0.60.
Nonetheless, if the bulls fail to bounce back from $0.50, the situation could turn more negative. If that psychological support is broken, the price of XRP could fall sharply towards the next psychological resistance at $0.45.