Why is the supply of XRP decreasing?
Ripple's XRP has maintained its downward trend since early October. The decline began after the US Securities and Exchange Commission (SEC) announced it would appeal a federal judge's ruling against the payment service provider.
As a result of this price drop, the surplus XRP supply has reached its lowest level since July. This analysis explores the potential for continued decline in token value.
Ripple holders count their losses
On October 2, the SEC filed its notice of appeal, seeking to overturn the court's decision that the programmatic sale of XRP to retail investors is not a violation of securities laws. The regulator then filed the appeal on October 10, prompting Ripple to announce its plans to file its own appeal.
These developments have put downward pressure on XRP prices over the past month. At press time, it is trading at $0.50, a 6% drop since October 2nd.
This price drop has led to a decrease in the percentage of XRP supply that is held by profit. That figure now stands at 70.4% – the lowest since July 12, according to Santiment data. For context, this measure was 90% in early October, the SEC's notice of appeal.
Read more: XRP ETF explained: what it is and how it works
As the supply of assets in surplus decreases, fewer holders will hold in surplus compared to when they earned it. This decline usually correlates with a decline in the value of the asset, as in the case of XRP. As more holders experience losses, selling pressure may increase, especially if token holders intend to reduce further losses.
XRP's Relative Strength Index (RSI) shows a continued increase in bearish selling pressure. Currently sitting at 38.77, this indicator – to assess whether an asset is oversold or overbought – suggests that selling activity among traders has increased more than buying.
XRP price prediction: One way to stop the decline
The decline in XRP price pushed it below the critical support floor at $0.52. As of this writing, the altcoin is trading at $0.50, and as buying pressure subsides, XRP risks extending its decline.
Reads from its Fibonacci Retracement tool suggest that the altcoin may attempt to test the $0.46 support level. If the bulls fail to defend it, XRP could fall back to the July 5 low of $0.38.
Read more: Ripple (XRP) Price Prediction 2024/2025/2030
However, a shift in market sentiment from bearish to bullish will invalidate this bearish forecast. If this happens, the price of XRP may attempt to break above $0.52, a successful break above this level would put it on track to trade above $0.60.
Disclaimer
In accordance with Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always do your own research and consult with a professional before making any financial decisions. Please note that our terms and conditions, privacy policies and disclaimers have been updated.
