The price of XRP, the native cryptocurrency of Ripple’s blockchain network, has increased by 27% in 3 days.
The rally of XRP comes during a period in which most major cryptocurrencies have been struggling against the U.S. dollar amidst a market pullback.
Around the same time frame, the price of bitcoin has declined from $8,200 to $7,800 and the price of Ethereum has slipped from $177 to $169.
As a cryptocurrency mainly utilized on RippleNet by financial institutions to process global payments, historically, the price trend of XRP has seen a high level of correlation with new entrants into the RippleNet ecosystem.
The value of any payment settlement network comes from financial institutions and payment processors that use the protocol to send and receive information, establishing a network effect.
As such, on the side of fundamentals, additions of large financial service providers onto Ripple’s blockchain solutions have been considered one of the major factors for the short term price trend of XRP.
For instance, on June 17, when Ripple announced a strategic partnership with major remittance service provider MoneyGram, the price of XRP went on to increase from $0.26 to $0.31 in the 48 hours that followed, by nearly 29%.
At the time, Brad Garlinghouse, CEO of Ripple, said:
“This strategic partnership will enable MoneyGram to greatly improve its operations and enable millions of people around the world to benefit from its improved efficiency. This is a huge milestone in helping to transform cross-border payments and I look forward to a long-term, very strategic partnership between our companies.”
While strategic partnerships of Ripple and increased usage of XRP by financial institutions mainly tend to affect the price trend of XRP, in the past week, analysts have turned to technicals to support the recent upside movement of the cryptocurrency.
In comparison to the 2nd quarter of 2019, Ripple has not had high profile strategic partnerships and RippleNet has not seen the entry of new large-scale financial institutions that will use XRP to process payments.
However, subsequent to a relatively large fall against the U.S. dollar from its record high, XRP has started to demonstrate oversold conditions, contributing to the recovery of the asset.
Peter Brandt, a technical analyst and a best-selling author, said that technicals show signs of a bottom for XRP against bitcoin after falling by nearly 66% since early 2019.
Another cryptocurrency trader noted that a key technical indicator turned bullish for the short term trend of XRP, strengthening the possibility of a recovery.
“Every bullish MACD crossover on the weekly chart was followed by significant price increases. Lowest gain 170%+ Best 4600%+ Recently, MACD turned bullish once again,” the trader said.
It remains unclear whether the declining volume in the cryptocurrency market and the build up of sell pressure on top of dominant cryptocurrencies like bitcoin and Ethereum would affect the upside movement of alternative assets like XRP.
At a macro level, technical analysts have demonstrated a generally bearish outlook on the short term trend of the cryptocurrency market in recent weeks as bitcoin failed to recover beyond key resistance levels.
Click here for a real-time XRP chart.