XRP was one of 2019’s biggest losers, posting sizeable year-to-date losses in spite of the massive gains incurred by Bitcoin and some other major altcoins. This poor price action has largely stemmed from controversy surrounding the token’s close ties to FinTech company Ripple.
It is important to note that one key piece of data suggests that investors are starting to give up on the cryptocurrency, and this negative sentiment could be just what is needed to fuel the next major price rally.
XRP Stuck Beneath $0.20 as Investors Flee the Cryptocurrency
At the time of writing, XRP is trading down just under 1% at its current price of $0.19, posting a slight climb from its recent lows of $0.186 that were set just over one day ago.
The embattled cryptocurrency has been struggling to break above the $0.20 region for the past several weeks, with every attempt to move above this level being closely followed by a swift rejection that sends it back into the $0.19 region.
Investors who watched their XRP holdings consistently decline in value throughout 2019 appear to be losing faith in the crypto, which is emblematic while looking at the major decline in active wallet addresses the crypto has experienced as of late.
Luke Martin, a popular cryptocurrency analyst on Twitter, spoke about this in a recent tweet, noting that there is a direct correlation between active address growth and price action.
“The 4 major coins with declines in active addresses for 2019 all had negative performance for the year: $ETH, $XRP, $XLM, $ZEC. Top 3 best performers had solid active address growth: $BTC, $XTZ, $LINK,” he noted.
The 4 major coins with declines in active addresses for 2019 all had negative performance for the year:$ETH, $XRP, $XLM, $ZEC
Top 3 best performers had solid active address growth:$BTC, $XTZ, $LINK
h/t @coinmetrics pic.twitter.com/SxakRLuz9V
— Luke Martin (@VentureCoinist) January 2, 2020
Massive Decline in Investor Sentiment May Fuel a Rally
Although the dwindling hope amongst XRP investors appears to be overtly bearish, it is imperative to note that extremely negative sentiment is often viewed as a counter indicator that precedes major trend shifts.
Mr. Anderson, another popular cryptocurrency analyst, explained in a recent tweet that XRP’s macro price action looks quite bearish, but that many altcoins including XRP will only be able to form long-term bottoms when investors “throw in the towel.”
“$XRP: By the way, we are only two months past the OP & somehow this thing managed to drop another 40%. Be very leery of those providing several insane price predictions. Some of these POS coins might actually bottom. However, that will occur when people throw in the towel on them,” he explained while pointing to the chart seen below.
By the way, we are only two months past the OP & somehow this thing managed to drop another 40%
Be very leery of those providing several insane price predictions
Some of these POS coins might actually bottom. However, that will occur when people throw in the towel on them pic.twitter.com/ENMdYcbWwd
— Mr. Anderson (@TrueCrypto28) January 2, 2020
How XRP trades against both Bitcoin and USD in the near-term will likely continue to be bearish, but another bout of capitulation could be just what is needed for the crypto to form a long-term bottom and begin another parabolic ascent.
Featured image from Shutterstock.
