Ripple (XRP) has been on a wild bullish spree these past few days. A lot of people even in the crypto community have been trying to wrap their mind around how Ripple (XRP) has achieved such gains without the blessing of Bitcoin (BTC). Certainly, for critics of Ripple (XRP) this was another opportunity to criticize it as a pump and dump scheme and to warn new investors as to the harms of catching the FOMO train on this one. This may sound somewhat farfetched but these critics have a point. The existing rally for Ripple (XRP) that we have witnessed is very different from the ones we have seen in the past.
First of all, in the past, when Ripple (XRP) rallied, it was with the blessing of Bitcoin (BTC) or the rest of the market. This time, we can clearly see that this is not the case. However, Ripple (XRP) investors seem undeterred by this and are still looking for the price to retrace further so they can buy more. The above chart for XRP/USD on the daily time frame shows that Ripple (XRP) has also done a good job at keeping investors sentiment in its favor. Despite the fact that the price of Ripple (XRP) retraced heavily on the same day that it shot up towards a price of $0.80, it preserved investor confidence by entering a major bull flag instead of falling back to the trend line.
A lot of theories are circulating around as to what could be the cause of this pump. Some believe that this has to do with Ripple (XRP)’s partnership with big banks and the launch of xRapid. While this may be true long term, short term this is not what is really influencing the price of Ripple (XRP). It is definitely the big players trying to capitalize on the sentimentalist approach of Ripple (XRP) investors who as we have seen in the past trade big on FUD and FOMO. This is largely because most investors in Ripple (XRP) are either first time investors who have no prior knowledge of how financial markets work, or they are blinded by the dream of how Ripple (XRP) could eventually end up dominating the trillion dollars forex market. The whales, knowing this, pump the price a bit, which is followed by more pumps from buyers FOMO’ing in. Of course, as they buy up, the whales keep selling.
This is not a big concern in itself, because we have seen this type of behavior in the past as should be expected in any unregulated or under regulated market. However, the cause of concern for Ripple (XRP) investors should be the above weekly chart for XRP/BTC. This chart shows that Ripple (XRP) has already closed one candle in the green and will now close its second candle in the next few days. As we have seen during previous cycles, there are a total of four such consecutive candles that Ripple (XRP) forms against Bitcoin (BTC) before it enters a correction.
As we can see, the first candle is already there and the second one is due to close in the next few days, yet the price of Ripple (XRP) is hovering around $0.55. If Ripple (XRP) trades at this pace while Bitcoin (BTC) trade sideways there is a strong probability that Ripple (XRP) may not even reach its previous all time high as it completes its cycle against Bitcoin (BTC). So, while the recent interest in Ripple (XRP) should be seen as confidence inspiring for XRP believers, it is also important to understand the consequences of such rallies and how it impacts the price of XRP long term.