XRP is up as much as 60% in the first quarter of 2023, thanks to increased speculation over Ripple’s legal victory over the U.S. Securities and Exchange Commission (SEC) and optimism about the digital currency.
The XRP/USD pair is currently targeting more gains in the second quarter, mainly due to a classic bullish continuation pattern.
XRP price plotting a bull flag
At the end of March, XRP broke through the resistance of a multi-month rising trendline, blocking the possibility of a 35% pullback. The recovery pushed prices to $0.58 on March 29, the highest level since May 2022.
Now, XRP is consolidating sideways in a pattern that looks like a bullish flag. This bullish continuation pattern forms when price consolidates within a symmetrical triangle after a strong rally.
A bullish flag will form when the price breaks above its upper trendline accompanied by increased volume. The breakout target for this pattern is obtained by adding the height of the previous uptrend (flagpole) to the breakout point.
In other words, the upside target for the price of XRP in the second quarter is $0.65, an increase of about 30% from current levels.
XRP/USD daily price chart. Source: TradingView
Conversely, a decisive close below the lower trendline of the pennant could invalidate the bullish setup and increase the likelihood of XRP testing the 50-day exponential moving average (in red) around $0.44 as its next downside target.
Whales increase XRP holdings as dollar weakens
According to data tracked by Santiment, the year-to-date return of the XRP price coincides with the cumulative increase of whales.
For example, despite the announcement, the XRP supply held by most groups of whale addresses — whether it’s 1,000 – 10,000 XRP, or 100 million – 1 billion XRP – increased as the altcoin rallied 60%. Reports of some whales emitting XRP are worth around $35 million.
Distribution of XRP supply among whales. Source: Santiment
Meanwhile, dollar weakness has boosted risk assets across the board, including bitcoin, whose correlation with XRP is largely flat on a daily basis this year.
XRP/USD and BTC/USD daily correlation coefficient. Source: TradingView
Overall, the bullish scenario for XRP still hinges on Ripple’s short-term victory over the SEC, but a “sell the facts” scenario should not be ruled out either.
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As reported by Cointelegraph
