The XRP Binance Scarcity Index has turned positive, signaling tightened token supply on the exchange. Traders are closely watching XRP’s price as it approaches key technical levels.
CryptoQuant analyst Arab Chain reported on March 15 that the index has risen to around 0.48, indicating moderate supply scarcity compared with historical levels on Binance. Data from TradingView shows that XRP is trading at around $1.42. That represents about 0.57% gain from yesterday.
TradingView’s intraday price movement showed that the token is trading in a range from approximately $1.405 to $1.425. These movements suggest that XRP is in a consolidation phase and traders are awaiting the next directional catalyst.
Source: TradingView
Binance Scarcity Index Suggests Supply Tightening
Arab Chain stated that previous instances of increases in Binance’s XRP Scarcity Index have correlated with decreases in exchange reserves. Decreases in reserve levels are typically caused by investors withdrawing their assets to private wallets or due to a decrease in deposit flow into exchanges.
As such, even moderate buying pressure can cause greater price movement. Additionally, Arab Chain stated that the index has at times fallen to extremely negative values.
Source: CryptoQuant
Movements to those extreme negative values have occurred when there are large inflows of XRP deposited to exchanges. This causes the supply of tokens available for sale to increase and often correlates with strong selling pressure.
Also Read | Is XRP About to Break Out? Multi-Year Triangle Points Toward $48 Target
Derivatives Activity Indicates High Level of Interest
CoinGlass reports that the derivatives activity for XRP continues to remain high as traders take positions prior to an expectation of a breakout. Futures trading volume of XRP has reached about $2.26 billion over the last 24 hours, and at present, it is far greater than the $377 million in spot trading volume, per data from TradingView.
Additionally, the open interest in XRP futures contracts has risen by approximately 1.09%, or to around $2.59 billion. This further supports the TradingView price analysis that traders are holding onto their leveraged position, awaiting an upward or downward directional move.
According to the CoinGlass statistics, the current long/short ratio for all derivative markets is approximately 1.00. This number signifies that there is currently a balance in the sentiment between bulls and bears.
Source: CoinGlass
Important XRP Technical Structure
While on-chain and derivatives data indicate high levels of interest in XRP, technical analysts are also monitoring key structural levels. Crypto analyst EGRAG CRYPTO said that the digital asset is currently testing its 200-week exponential moving average (EMA) and that historically this level has acted as a significant macro trend pivot.
EGRAG CRYPTO explained that the token recently dropped into the 200 EMA level but quickly rebounded from it. It even formed a yellow triangle compression pattern on the weekly chart.
Compression patterns are typically seen as a sign of absorbing selling pressure and a token that is preparing for a larger move. Following the chart pattern, EGRAG Crypto outlined two possible technical scenarios.
Scenario one includes a liquidity sweep beneath the triangle. This means that the potential price target could be the $0.93-$0.80 area before a subsequent upswing.
Scenario two includes a breakout of the triangle to the upside. The potential price targets after the breakout will be between $2.20 and $3.20, provided there is a shift in momentum to the bullish side.
Why Does it Matter?
Tightening XRP exchange supply and rising derivatives activity suggest the market could be approaching a major price move. This article is for informational purposes only and does not constitute financial advice.
This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
Also Read | XRP Holds $1.40 While Multi-Year Triangle Breakout Points to $50 Potential
