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Ripple (XRP) price suffered a harsh reversal this week as sentiment in the crypto industry waned, and as geopolitical risks rose. After surging to $0.6647 last week, Ripple has retreated for four consecutive days and was trading at $0.5417, its lowest point since September 12.
Increased whale activity
This week, Ripple made headlines after Bitwise filed to launch an Exchange-Traded Product (ETP). The ETP will make it easy for people to invest in XRP, one of the biggest players in the crypto industry, with a market cap of over $30 billion.
As a result, data by Santiment showed that many whales continued buying the token, hoping that it would jump ahead of the ETP approval and listing. For example, the 24-hour volume rose by 4% to $2.9 billion.
Most notably, XRP’s total open interest has soared, reaching a multi-month high of $1 billion on 30th September. Rising open interest is a sign that investors are enthusiastic about the token in the futures market.
📺 Bitwise’s XRP ETP filing (not to be confused with an ETF, which would be required if it was a security) has showed a significant on-chain response. Whale activity, social hype, and an 8-month high $2.39B in transaction volume indicates potential bullish momentum—but remember,…
Bitwise’s application is notable because of its role in the crypto industry, where it has become one of the biggest players in Bitcoin and Ethereum ETFs. Its Bitcoin ETF (BITB) has gained over $2.3 billion in assets, while the Ethereum (ETHW) fund has over $237 million in assets.
There is a rising chance that the XRP ETP will be approved because courts have already ruled that it was not a security. If it were a security, then it would have demanded more regulations, including regular disclosures to investors.
In most periods, as we saw with Bitcoin and Ethereum, Ripple is likely to rise ahead of its approval, which could take a few months.
However, in the long term, the XRP ETP will likely have a minimal impact on the token because institutional interest will likely be minimal.
A good example of this is Ethereum, the second-biggest player in the crypto industry, has seen mild interest from investors. Data by Sosovalue shows that all Ether ETFs have over $6.5 billion in net assets. Before the ETF listings, the Grayscale Ethereum Trust (ETHE) has over $9 billion in assets.
The iShares Ethereum ETF has over $928 million in assets, while Fidelity’s FETH has $360 million. On the other hand, their Bitcoin ETFs have over $20 billion and $12 billion in assets, respectively. Therefore, there are signs that investors believe that Bitcoin is their best alternative asset.
The other risk for XRP ETF is that the token has a long history of underperformance. For example, while Bitcoin remains 13% below its all-time high, XRP price is 71% below its record level.
XRP price also reacted mildly to the in-principle approval by Dubai regulators.
RLUSD stablecoin launch
The other important catalyst for the XRP price is the upcoming launch of the Regulated Stablecoin known as RLUSD.
Ripple Labs has been working on this stablecoin in the past few months as it seeks to challenge other issuers like Tether, Circle, and PayPal.
A stablecoin makes sense for Ripple because of its role of incentivising cross-border payments globally. It would be better than using XRP, an asset known for its substantial volatility.
It would also be a big cash earner for Ripple Labs if it succeeds. Stablecoin issuers make money by investing the funds they receive from holders. For example, if a stablecoin has a $1 billion market cap, the issuer can decide to invest in government bonds, which are yielding about 5%.
Tether, which has over $130 billion in assets, has become a cash printer that is more profitable than Blackrock, a company with over $10 trillion in assets.
Ripple, however, will face the challenge that many stablecoin issuers have faced: competing with Tether. For example, PayPal’s PYUSD has accumulated over $692 million in assets despite PayPal’s popularity in the fintech industry.
The other competition is coming from yield-focused stablecoins. Ethena’s USDe stablecoin has gained over $2.5 billion in assets because it pays substantial yields to investors. Other top yield-focused stablecoins are Ondo Finance’s USDY and OUSG, which pay a yield of 5.05% and 5.39%.
Ripple XRP price analysis
XRP chart by TradingView
The daily chart shows that the XRP price soared to a multi-month-high of $0.6500 last week as cryptocurrencies dived. That was an important level because it struggled to move above it several times since August. As such, it was a false breakout, which explains why it has dropped sharply in the past few days.
XRP price has also moved below the 50-day and 100-day Exponential Moving Averages (EMA). Also, oscillators like the Money Flow Index (MFI) and the Commodity Channel Index (CCI) have all pointed downwards.
Therefore, Ripple will likely continue falling as sellers target the next key support level at $0.4310, its lowest point on August 5. That drop will be confirmed if it drops below the key support at $0.5040, its lowest level on September 6. It also means that the token may drop by over 18% from the current level.
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