XRP (XRP) risked a further drop below $1 as its bearish technical setup converged with increased inflows to exchanges.
Key takeaways:
XRP faces overhead resistance at $1.42
XRP’s 13% rally to $1.43 between Saturday and Sunday ran into a resistance wall at $1.39-$1.43, causing it to retrace to its price at writing of $1.34.
The cost-basis distribution heatmap shows that a large cluster of supply is within this area, where nearly 1.48 billion XRP were acquired over the last 30 days. This marks an area of stiff resistance for XRP, limiting upside potential.
XRP: Cost basis heatmap. Source: GlassnodeThe daily XRP price chart below shows that this area coincides with the upper trend line of a symmetrical triangle, which has suppressed the price since Feb. 1.
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The XRP/USD pair is trading below the lower trend line of the triangle at $1.35. A daily candlestick close below this level would validate the symmetrical triangle, clearing the path for a deeper correction.
The measured target of the prevailing chart pattern, calculated by adding the triangle’s height to the breakout point, is $0.95, about 29% below the current level.
XRP/USD daily chart. Source: Cointelegraph/TradingViewAs Cointelegraph reported, a break and close below the lower boundary of a falling channel at $1.20 puts the Feb. 6 low of $1.11 at risk of breaking down. XRP may then tumble to the psychological support at $1.
Analyst BitGuru commented on the support level at $1.20-$1.22, saying:
XRP/USD daily chart. Source: BitGuruMeanwhile, the two-day chart also puts a drop to $0.80 in play, fueled by selling from whales.
XRP supply on exchanges rises
Over the past week, more than 472 million XRP, worth about $652 million, were transferred to Binance, marking the largest inflow to exchanges in February, according to data resource CryptoQuant.
The transfer of tokens to exchanges often signals a potential willingness to sell or at least to position liquidity closer to the market.
“Such inflows typically reflect a more defensive posture from investors holding XRP,” CryptoQuant analyst Darkfost said in a QuickTake note on Monday, adding:
XRP inflows to Binance. Source: CryptoQuantAs a result, XRP balance on Binance has grown to 2.73 billion tokens from 2.55 billion in mid-February. This represents a total increase of about 180 million (+7%) in less than three weeks.
XRP reserve on exchanges. Source: CryptoQuantRising exchange balances are typically viewed as a bearish signal, as a greater supply available for trading can increase near-term selling pressure.
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