Here is a Signal That Shows Likelihood of a Higher XRP Price Rally

XRP is facing mild capitulation when most assets are seeing profit-taking trades, but Santiment reveals this indicates XRP has a higher likelihood to rally.

The bears have displaced XRP from the $0.50 psychological territory as it failed to capitalize on the latest market rally. Amid this situation, some XRP investors have resorted to capitulation, eliciting concerns among market participants.

However, a recent report from behavior analytical resource Santiment suggests that this trend signals that XRP has a higher likelihood of staging a price rally than most assets.

🤑 As #crypto‘s largest assets are ranging to start the week, $XRP is showing a slight #bullish sign due to mild trader capitulation. Historically, coins moving at a greater ratio at a loss compared to profit have a higher likelihood of rising in value. https://t.co/6pul5oxUsd pic.twitter.com/pM92pdxEli

— Santiment (@santimentfeed) June 26, 2023

The Santiment report considered the “Ratio On-chain Transaction Volume in Profit/Loss” metric for this analysis. The indicator shows that transactions involving most assets across the market lean toward the profit-taking territory. 

These assets’ metrics (ratios) show positive values, signaling that most traders are taking profits. Notably, Bitcoin‘s (BTC) ratio stands at 0.315, Ethereum (ETH) has a ratio of 0.407, the ratio for Litecoin (LTC) is 0.128, and Cardano’s (ADA) ratio is 0.030.

In contrast, XRP is witnessing a ratio of -0.267, which shows that most investors are witnessing losses on their XRP trades. Despite the concerns triggered, Santiment says this is a “slight bullish sign.”

According to the behavior analytics platform, historical data suggests that when a crypto asset faces a period of losses and a higher number of on-chain transactions resulting in losses, a subsequent price rally often follows.

XRP Historical Data

An investigation by The Crypto Basic corroborates these claims from Santiment. A closer look at the “XRP Ratio On-chain Transaction Volume in Profit/Loss” metric shows that an increase in loss-taking trades preceded the price surges experienced in January and March.

The metric plummeted to -0.700 on Jan. 1. This drop immediately preceded a price rally that saw XRP reclaim $0.4330 on Jan. 23. Similarly, the indicator declined to -0.1743 on Mar. 11. This decrease ushered in the XRP March rally. XRP eventually soared to $0.5850 on Mar. 29.

The rationale behind this trend is that when a crypto asset experiences a higher ratio of losses to profits, it may indicate that weak hands or investors with lower convictions are capitulating or selling off their holdings due to market turbulence.

Once these weaker participants have capitulated or exited the market, it can create an environment where the supply pressure decreases, potentially allowing the price to rebound. 

Meanwhile, XRP is currently trading at a low of $0.4734 as of press time. XRP’s bearish situation emerged on June 22 following a drop from the $0.5272 high. The asset has continued to register losses since then.