XRP price could be in the early stages of a turnaround after previously going through weeks of bearish price action.
The cryptocurrency’s performance during the weekend may signal that it is already happening, but it is just one of the numerous observations that point to such an outcome.
One of the main reasons for the bullish optimism around XRP price was an observation pertaining to its exchange reserves. CryptoQuant data revealed that XRP reserves on Binance dropped by more than 5 billion XRP coins.
The amount of XRP withdrawn from Binance in the last 5 days was approximately 8% of the cryptocurrency’s total supply.
Such a significant amount might be enough to cause an impact on price action. But could it be linked with the latest XRP price action?
According to recent reports, XRP worth over $13 billion has been withdrawn from exchanges. This was reportedly ahead of a major announcement pertaining to Ripple and XRP.
XRP Price Recovers From Oversold Territory
XRP price dipped as low as $1.90 on Sunday after tanking by about 17% from its weekly high last week. However, the cryptocurrency has achieved a significant recovery since then.
It exchanged hands at $2.18 at press time, which was equivalent to a 14% upside since Sunday.
The bounce back occurred after the price entered into oversold territory on the 4-hour chart. It was not yet oversold on the 1-day chart, but it did retest the 50% RSI level on the 1-week chart.
This was also the second time that price showed signs of recovery from the 50% RSI level on the weekly time frame. The latter also highlighted bullish divergence between the price and the RSI.
This observation, combined with the sharp decline in XRP’s exchange reserves on Binance, may signal that this could be the start of a major move for the asset. These outcomes occurred on the heels of major regulatory changes involving the crypto market.
US Government Blurs Lines Between Crypto and Traditional Finance
There is no doubt that the U.S government has been pushing towards the crypto market. A complete shift from the crypto ban that had been instituted a few years back.
The ban previously prevented banks from offering any crypto-related services. This includes preventing people from buying crypto directly using their banks, as well as credit and debit cards.
Fast forward to the present, and the ban has now been lifted. Federal Reserve Chairman Jerome Powell recently announced that banks can henceforth conduct crypto-related activities.
The announcement marked one of the biggest milestones for cryptocurrencies. This is because it underscores the removal of bottlenecks that previously limited liquidity flows into crypto.
What This Means For XRP Price?
Ripple has been making ties with banks in an attempt to improve cross-border financial services in the banking sector.
The development may finally encourage more banks to adopt Ripple services. In addition, there were rising expectations that XRP ETFs might be approved soon.
But it was not all good news for XRP and its potential. Ripple-related address activity has been declining.
IntoTheBlock data revealed that the number of active addresses on the XRP ledger dipped from over 20,000 active addresses to about 7,000 addresses in the last 24 hours.
This latest dip pulled address activity to the lowest levels observed in the last 6 months. But could this negate the demand expectations around XRP?
Declining address activity on the XRP Ledger was in direct contradiction of the recent wave of exchange outflows.
However, the declining address activity might be due to declining DEX activity rather than demand on exchanges.
