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Impact of Powell's Statements and Rate Hike Speculation
The cost of XRP (XRP) has seen a downturn today, reflecting the wider behaviour of the cryptocurrency market. Investors are opting for lower risk following hawkish remarks made by Federal Reserve Chairman Jerome Powell at the recent Jackson Hole symposium.
Following an atmosphere of building suspense around potential rate hikes, the XRP price fell by 1.25% to $0.507 on Aug. 25, underachieving in comparison with a 1% decrease in overall crypto market capitalization over the same timeframe. The U.S. dollar index (DXY), meanwhile, reached its highest point in two months, suggesting a growing trend amongst investors towards more secure options.
Market sentiment is currently divided on the topic of rate direction. Based on insights from the CME FedWatch Tool, the consensus for a rate hold in September remains strong. However, the chance of a rate increase in November has risen to 41% - up significantly from 32% just a month ago.
Significant Reduction in XRP Exposure by Whales
In the days building up to Powell's speech, a noticeable reduction in XRP retention by whales was observed.
The share of XRP held by addresses with balances in excess of 1 billion tokens slipped from 41% to 39.21% within a week. The supply retained by those in the 10 million-to-100 million balance bracket has also seen a decline of 0.25% over the past four days.
Interestingly, one affluent XRP investor transferred 29.3 million XRP, equivalent to $15.13 million, to the Bitstamp exchange. This move is likely to increase the readily available supply and potentially amplify sell-pressure.
Are More XRP Losses on the Horizon?
Looking at XRP's performance from a technical viewpoint, further losses could be looming in the near future.
Notably, the rising consolidation trend of XRP is indicating a potential bear flag. This is a well-known bearish continuation pattern that emerges when the price forms within two ascending, parallel trendlines following a strong downward movement (labelled the flagpole).
The bear flag is completed after the price goes below its lower trendline, falling the same amount as the flagpole's height. Given this, the bears will be hoping for a price drop towards $0.40 – a 20% decline by September.
However, optimists will be banking on XRP's daily relative strength falling into oversold territory, which could herald a temporary recovery towards the flag's upper trendline. If this were to occur, XRP could reach a price target of $0.54, a 6% increase, by the end of August.
Please note, this article does not offer investment advice or recommendations. There are inherent risks in all investment and trading activities and individuals should carry out their own research prior to making a decision.
