Analysis of XRP Price Movement Using Wyckoff Theory
The XRP price has experienced a significant reversal this month, plummeting by almost 30% from its highest level in January. According to CoinGlass data, futures open interest dropped to $3.45 billion on Wednesday, down from $7.45 billion in January, indicating a decline in investor demand. The daily XRP volume has also decreased to $4 billion from over $32 billion a week ago.
Despite this downturn, several catalysts may push the XRP price higher in the coming months. Notably, Polymarket’s odds of a spot Ripple ETF have jumped to over 80%, with JPMorgan estimating that spot XRP ETFs may experience over $8 billion in inflows in the first year. This is substantial, considering spot Ethereum ETFs have accumulated just $3 billion in inflows. Ripple Labs has also been making strategic deals, such as partnering with Unicambio, a Portuguese currency exchange provider, to use its network for currency transactions.
Ripple has received a money transmitter license in New York and Texas, enabling it to operate its services in these major US states. Furthermore, Ripple USD has gained market share, with its daily volume exceeding $200 million, surpassing most other stablecoins.
Applying Wyckoff Theory to XRP Price Movement
The Wyckoff Theory, developed about 95 years ago, explains the movement of financial assets over time, identifying four phases: accumulation, markup, distribution, and markdown. XRP price remained in an accumulation phase between 2022 and November 2024, characterized by consolidation between $0.3260 and $0.9326.
It then entered the markup phase in November, driven by a surge in price, leading to Fear of Missing Out (FOMO) among investors. This phase is marked by higher demand than supply. Currently, XRP has moved into the distribution phase, characterized by high volatility. If the Wyckoff Theory holds, XRP will now enter the markdown phase, potentially dropping to the support level at $0.9325, which coincides with the 78.6% retracement point and is 61% below the current level.
Predictions and Insights
Based on the analysis, there are two possible scenarios for the XRP price:
1. Bearish Scenario: If the Wyckoff Theory plays out, XRP may experience a significant drop of up to 65% to the support level at $0.9325. This would be a result of the markdown phase, characterized by high volatility and a potential decrease in investor demand.
2. Bullish Scenario: The bearish view will become invalid if the Ripple price rises above the year-to-date high of $3.40. This could be driven by the potential approval of a spot Ripple ETF, which may lead to increased investor demand and a subsequent price surge.
In conclusion, the XRP price movement is subject to various factors, including investor demand, regulatory approvals, and market trends. While the Wyckoff Theory suggests a potential drop in price, the approval of a spot Ripple ETF and Ripple Labs’ strategic partnerships may drive the price higher. As such, investors should closely monitor market developments and adjust their strategies accordingly.
Key Statistics:
- XRP price drop: 30% from its highest level in January
- Futures open interest: $3.45 billion (down from $7.45 billion in January)
- Daily XRP volume: $4 billion (down from over $32 billion a week ago)
- Polymarket’s odds of a spot Ripple ETF: over 80%
- Estimated inflows for spot XRP ETFs: over $8 billion in the first year
- Ripple USD daily volume: over $200 million
- Potential support level: $0.9325 (coinciding with the 78.6% retracement point)
- Potential price drop: up to 65%
