XRP Price Prediction: Token Attempts to Retest Support

Ripple's price movements on the one-day chart show that the altcoin has been trading within a horizontal channel since July 17.

Ripple’s XRP Continues to Decline on Exchanges, But Price Drops: Here’s Why

As cryptocurrency markets continue to navigate shifting trends, a key metric for Ripple's XRP has been its dwindling presence on cryptocurrency exchanges. This phenomenon, typically associated with reduced selling pressure, often bodes well for a token's price performance.

However, in XRP's case, a surprising disconnect has emerged, with the token's price continuing to decline despite the decreasing exchange holdings. This observation has left XRP enthusiasts scratching their heads and wondering what might be driving this unusual scenario.

As of writing, cryptocurrency exchanges hold approximately 2.58 million XRP tokens, valued at $1.32 million at current market prices. This quantity has seen a significant 28% decrease since February 1, according to data from Santiment.

When the supply of an asset on exchanges decreases, it usually signifies that fewer units are available for immediate selling, as investors opt to hold on to their tokens. This, in turn, tends to reduce selling pressure and can drive the price of the asset up—provided there is a corresponding surge in demand.

In XRP's case, however, this surge in demand has been lacking, despite the reducing exchange-held supply. This lack of demand has seen XRP's price move in the opposite direction to what is typically expected under such conditions.

After reaching a year-to-date high of $0.71 on March 11, XRP has since seen a downturn, with its value dropping by 24%. The token is currently trading at $0.53, and this price decline has also impacted the percentage of XRP's total supply that is held in profit.

On March 11, 91.21% of XRP's supply was in the green. However, as the token's price fell, this percentage also plummeted to a 16-month low of 67.38% by July 4. Fortunately, there has been a slight rebound, and the figure has now recovered to 76.79%, according to Santiment's data.

XRP Price Prediction: Token Attempts to Retest Support

A glance at Ripple's one-day price movements on the reveals that the altcoin has been trading within a horizontal channel since July 17. This technical pattern is formed when an asset's price moves within a defined range, with the upper line acting as resistance and the lower line as support.

XRP's price fell below the channel's lower support line on September 5 but has since started to rally, indicating a retest of the former support, which will only be successful if demand for XRP remains strong.

If the retest holds, XRP could resume its uptrend, with price targets of $0.56 and potentially $0.60. However, if the retest fails, the price could drop to $0.46, invalidating the bullish outlook.

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