Key Takeaways
Is XRP forming another market bottom?
Possibly, as the wave count showed the corrective wave 4 was underway and could be followed by the 5th and final impulse wave beyond $4.
Do the on-chain metrics agree with a bullish outlook?
Yes, the outflows of XRP from exchanges were at a record high, indicating intense accumulation and reinforcing bullish expectations.
In 1938, American accountant and author R.N. Elliott published a technical analysis book called “The Wave Principle”. In it, he detailed how stock market price movements might appear random, but actually follow predictable patterns that can be measured and forecast.
Source: EGRAG Crypto on X
His theory that the market moves in repeated waves that reflect investor psychology is applicable even today. It is an 8-wave pattern that uses Fibonacci ratios to help predict potential market turning points.
In a post on X, trader EGRAG showed why this “power of 5” could take XRP’s price to $6.75, and possibly as high as $18.25. In fact, a recent AMBCrypto report captured why the current setting could be a market bottom like the one in April.
If this turns out to be true, XRP investors stand to make enormous profits. How likely is this bullish scenario though?
XRP netflows out of exchanges at historic highs for a month
Source: Glassnode
A look at the XRP exchange net position change metric revealed extraordinarily high amounts of XRP outflows from exchanges. The metric measures the difference between XRP inflows and outflows to all exchanges.
Negative values imply more outflows. Starting in the second half of October, these figures were the highest on the Glassnode data record.
It was an extremely bullish signal for investors. Combined with the price forecast based on the Elliott wave theory, this could set up XRP for an explosive rally.
Source: Glassnode
On the other hand, the long-term holder NUPL has been correcting from euphoric levels that it reached towards the end of 2024. Historically, such high profit levels among investors do not arise twice within a cycle.
Once the euphoria zone was hit, the price had nowhere to go but south. This cycle was slightly different – The metric reached 0.748 (just shy of euphoric levels) in July, when XRP rallied to $3.66.
Has the current correction been a healthy reset, or will it be followed by more selling pressure and a steady XRP downtrend? The evidence points towards a bullish future, but investors should always be prepared for the worst.
Hence, they must evaluate the invalidation point where their bullish conviction would be shown to be wrong by the market, and be prepared to follow their plan.
