XRP price forms a bullish engulfing as Binance reserves dip
XRP price could be about to rebound in the near term after forming a bullish engulfing pattern as key catalysts like falling Binance reserves and ETF inflows align.
- XRP price has formed several bullish chart patterns on the daily chart.
- The supply of XRP tokens in exchanges has dropped to the lowest level in months.
- Spot XRP ETF inflows have continued rising this week.
The Ripple (XRP) token was trading at $1.8885 at press time, up slightly from the intraday low of $1.7758.
A potential catalyst for the XRP price is third-party data showing that the token’s supply on exchanges has continued to fall.
Data compiled by CryptoQuant indicate that the supply has been in a pronounced downward trend since peaking in October this year. It has now reached its lowest level of the year.
Falling Binance exchange reserves are significant because it is the largest venue for XRP trading. Data compiled by CMC shows that XRP’s volume in Binance on Friday stood at over $600 million, much more than Upbit’s $355 million.
Declining exchange balances indicate that investors are moving their tokens to cold storage, suggesting they expect the tokens to rebound over time.
The falling exchange balances is happening at a time when XRP ETF demand remains substantial. Data compiled by SoSoValue indicate that spot XRP ETFs had over $68 million in inflows this week, bringing the cumulative net inflows to $1.06 billion. These inflows brought the total assets to $1.14 billion.
XRP ETF inflows this week were notable, occurring when Bitcoin and Ethereum funds shed assets. Ethereum and Bitcoin ETFs have shed over $568 million and $338 million, respectively.
XRP price technical analysis
The daily timeframe chart shows that the XRP price settled at a crucial support level this week. Its lowest level coincided with the lowest points in October and November.
Ripple price has also formed an inverse head-and-shoulders pattern, a common bullish reversal sign. In this case, its shoulder is the descending trendline that connects the highest swings since October.
A closer look shows that the token has formed a bullish engulfing pattern, consisting of a large bullish candle that fully covers a small bearish one. It is one of the most common bullish reversal signs in technical analysis.
