XRP Holds $1.05 as NFP Report Looms — ETF Inflows & Warsh Optimism Fuel Mild Recovery

Quick overview

Ripple (XRP) coin managed to stop its previous downward trend and regain some bullish traction on the day. However, the reason behind its latest recovery can be attributed to the positive statement of Kevin Warsh, who said he is optimistic about the US economy. On the other hand, traders are waiting for the US Nonfarm Payrolls report as it will give a strong hint about the Federal Reserve interest rates. At the time we are writing this article, the XRP is trading at $1.05 level, showing more than 1 percent gain on the day.

XRP Traders Wait for Important US Jobs Report

On the US front, traders are keeping thier eyes on the Nonfarm Payrolls report, which is scheduled to be released on the day. NFP is very important data for investors as it gives very useful and strong idea about the US economy, like it will show how many new jobs created in the previous month. As of now, the market expects only 110,000 new jobs, which is much lower than the previous 172,000 number.

On the other hand, the unemployment rate is expected to remain at 4.3 percent. Meanwhile, Wage growth, which is the most important part to watch, could increase slightly to 3.5 percent. If wages rise fast, inflation will likely increase, which would not be good for any risky market like cryptocurrency.

Looking at all the situations, Federal Reserve Chairman Kevin Warsh said that inflation is still above the target and price stability is our main priority, but he did not give any clear hint about changing interest rates, which keeps the market cautious.

Despite this, the market sees an 85 percent chance that the Fed may raise interest rates in the coming months. This expectation of a rate hike is considered negative for crypto because expensive borrowing weakens risk assets like Bitcoin, XRP etc.

At that moment, the cryptocurrency market is trying to recover some ground as Kevin Warsh’s positive comments about the US economy give some confidence to the investors. As a result, Bitcoin gained traction above $60,000 and also pushed XRP higher.

If the jobs report comes in weak, the Fed may delay a rate hike, which would be good for risk assets like XRP. Whereas, if wage growth comes in stronger, the inflation could increase, which would effect XRP rally.

Crypto Fear Remains High but XRP Still Shows Some Strength

Despite the fact that XRP and Bitcoin are showing a slight recovery, the overall cryptocurrency market is still under pressure, as evidenced by the Extreme Fear present in the market. As of now, the Crypto Fear & Greed Index is at 19, indicating Extreme Fear, due to which investors are very fearful and demand for risky assets remains low.

On the other hand, XRP spot ETFs recorded a 3 million dollar outflow on Tuesday. Before that, there were 16 million in inflows dollars on Friday and 15 million dollars on Monday. This outflow is negative news in the short term as the total inflows still stand at a strong 1.48 billion dollars level, which shows that long term investors still have confidence in XRP.

Furthermore, retail investor activity has also weakened, as XRP futures Open Interest has fallen to $2.31 billion, which is lower than yesterday and far below the July peak of $10.94 billion. This means fewer traders are now actively trading. For XRP to make a real and strong recovery, smaller traders will also need to return to the market. Despite the weak sentiment, XRP is gaining more than 1 percent because long term ETF inflows are helping this XRP network.

ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.

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