The price of XRP appears set for a potential rebound, bolstered by the formation of a bullish engulfing pattern. This technical indicator coincides with several key factors, including a notable reduction in Binance reserves and increasing inflows into exchange-traded funds (ETFs).
At the time of writing, XRP was trading at $1.8885, a slight increase from an intraday low of $1.7758. Data from third-party sources indicates a steady decline in the supply of XRP on exchanges. According to CryptoQuant, this trend has been pronounced since it reached a peak in October, now sitting at its lowest point of the year.
The dwindling reserves on Binance, which is the largest platform for XRP trading, are particularly noteworthy. Data from CMC reveals that the trading volume for XRP on Binance exceeded $600 million on Friday, significantly outperforming Upbit”s volume of $355 million. This decline in exchange balances typically signals that investors are transferring their tokens to cold storage, indicating a belief that prices are likely to increase in the future.
In addition to the falling exchange balances, demand for XRP ETFs remains robust. As reported by SoSoValue, this week saw over $68 million in inflows into spot XRP ETFs, pushing cumulative net inflows to $1.06 billion. Consequently, total assets in these ETFs now amount to $1.14 billion. Notably, this surge in XRP ETF inflows comes at a time when both Bitcoin and Ethereum funds have experienced significant outflows, with Bitcoin ETFs losing over $568 million and Ethereum ETFs shedding $338 million.
A technical analysis of XRP indicates that the price has stabilized at a crucial support level this week, aligning with the lowest points observed in October and November. Furthermore, XRP has formed an inverse head-and-shoulders pattern, which is a common bullish reversal signal. The descending trendline connecting recent highs since October serves as the shoulder in this pattern.
Upon closer examination, the formation of the bullish engulfing pattern—a large bullish candle that completely encompasses a smaller bearish candle—suggests a potential reversal. This pattern is recognized widely in technical analysis as a strong indication of bullish sentiment.
