If the ‘triple bottom’ is confirmed, Bitcoin risks a 30% loss against XRP
After hitting a four-year low, XRP (XRP) appears on the verge of a comeback against the Bitcoin (BTC) trading pair. Fueling this bullish reversal is the emergence of a classic bullish pattern, namely a triple bottom formation.
XRP sees a 30% resurgence with Bitcoin
A triple bottom pattern is formed when the price makes three separate lows, all reaching the same price level, indicating strong support.
After the third low, the price breaks above the neckline resistance level formed between the lows and, according to the rule of technical analysis, increases with the distance between the lowest point of the pattern and the neckline.
As of July 12, the XRP/BTC pair was trying to break the neckline support at 793 satoshis (1 satoshi = 0.00000001 BTC).
Additionally, the pair's weekly Relative Strength Index (RSI) reading around 36 indicates that XRP is undervalued against Bitcoin, adding to its potential for recovery in the coming weeks. That said, a critical close above 793 satoshis will push XRP/BTC towards its triple bottom target around 1,055 satoshis.
Conversely, a retracement of neckline resistance, similar to similar pullbacks in recent history, pushed XRP/BTC to a low of 664 satoshis – down 15% from current prices – in August.
Bitcoin's 20% discount will benefit the XRP price
XRP's renewed strength versus Bitcoin comes largely from the German government's relentless sale of its BTC holdings in July. For context, the government-linked wallets have withdrawn 46,200 BTC since mid-June, amounting to an estimated $2.69 billion in selling-pressure.
Additionally, the payment of more than 140,000 BTC to Meta Gox's creditors dampened traders' appetite for Bitcoin, with XRP/BTC up more than 20% in July.
Related: Buying Dip? Bitcoin institutional investors add 100K BTC in a week
Bitcoin's dominance fell to 54.55% on July 12 from a peak of 55.46% a week ago, suggesting traders may turn to altcoins amid a period of BTC price consolidation.
Looking more broadly, XRP has been overbought compared to most top-tier crypto assets so far in 2024, with year-to-date returns sitting around -26.50%.
The weekly RSI for XRP/BTC has hit a two-year low around 33 and is moving up again, just three points from the oversold threshold. Historically, XRP's weekly RSI last reached 33, followed by an impressive 194% rally, suggesting significant upside potential at this point as well.
In comparison, BTC's weekly relative strength has been on a correction, having declined from an overbought high of 88 in March to a neutral level of 45.50 on July 12.
This decline shows that Bitcoin's bullish momentum has weakened significantly over the past two months, which could benefit “underbought” large-cap altcoins like XRP in the coming weeks. XRP may also benefit from the growing buzz around the “imminent” launch of an exchange-traded fund.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision.
