Analyst Predicts Potential 634x Increase for XRP – Are They Right?
The range of XRPL use cases has expanded beyond payments.
Key Takeaways
- Breakout from the significant descending trendline confirmed on a monthly close
- Price targets are modest despite the pompous framing
- Projection might not be valid
Twitter has always been a place where you can find different opinions and outlooks when it comes to the cryptocurrency market. Depending on the sentiment or the weight behind someone’s words, they are often picked up by media outlets and brought to the general public.
One of those has been an analytical outlook for the price of Ripple by an analyst JD (jaydee_757) , in which he states that the price of Ripple could increase even by 634x in the next bull cycle if history repeats itself.
His words do carry weight, especially in the case of Ripple. With the majority of analysts predicting more upside when XRP was around $0.80, he pointed out a potential crash to $0.28 which is exactly what happened.
In this post, we will re-examine this possibility and its likelihood by looking at the indicators used for this projection and comparing them to some of our expectations and analytical methods.
Re-examining the JD Analysis
We have recreated his chart, and now we are going to go over each point that makes him bullish. It is a monthly chart from Bitstamp and 3 key points indicating that the price of Ripple is headed to a new bull cycle.
The first and, to JD, the most important one is the monthly candle close above the descending resistance, confirming that a breakout occurred from its multi-year bear cycle.
He then used two indicators ADX/DI and MACD to confirm the starting uptrend, also by comparing their values and gasps as they have behaved in the previous cases and to support his assumption.
Comparing this monthly candle close with the two prior cycles and this is where the 634x price potential comes from – the first time the price of Ripple broke out from the descending structure in March 2017.
The time breakout occurred in November and according to JD the price went for a 17x increase measured to the next high in April 2021.
A little bit of a bullish bias can be seen here when it comes to his measurements the first one came as a 357x increase measured from the candle bodies and 628x measured from the start of the March 2017 green candle.
He most likely took the starting point from the previous red candle wick (February 2017), to overexaggerate the price increase.
The second cycle increased from December 2020 after a breakout occurred and made a downward wick which is the lowest we can measure from, and to the highest point see after in April 2021, we have seen just a little over a 10x increase.
So what about the projected target for the current increase? To be fair, JD didn’t state that the price of Ripple would be expected to increase by another 634x.
He drew two parallel curved lines encompassing highs and lows, similar to how a linear regression line would be plotted, but done manually, which is also a bit arbitrary. Either way, JD projected two targets, also not specified by examining his chart, the first one is close to $5, just over the all-time high, while the second one is on the manually drawn curved line around $9.
Measured from the lowest point the price of Ripple has been in this bearish cycle which is at $0.311 to its max target of $9.94 on our recreated chart, we come up with a potential increase of 31x.
Is This Projection Valid?
An important thing to note is that every projection has its shortcomings and anyone can project anything.
That being said JD compares previous times in which the monthly candle closed above the descending bear market trendline, and supports the breakout by ADX/DI and MACD indicators.
There is no denying that this is a bullish signal. However, one important thing to take into account is the comparison part.
The question in mind is whether or not the high of April 2021 was the third bull market high, or was it a corrective high in a multi-year bear market since it was still lower than the previous high in January 2018. If the second is the case, then the comparison is not valid.
The fact that we have seen a breakout from a descending trendline doesn’t have to mean that the price is headed for a bull cycle. It can mean that it is, which is why we can conclude that it is still very early for these types of overbullish projections.
Disclaimer
Please note that the contents of this article are not financial or investing advice. The information provided in this article is the author’s opinion only and should not be considered as offering trading or investing recommendations. We do not make any warranties about the completeness, reliability and accuracy of this information. The cryptocurrency market suffers from high volatility and occasional arbitrary movements. Any investor, trader, or regular crypto users should research multiple viewpoints and be familiar with all local regulations before committing to an investment.
