Ripple (XRP) Price Forecast Q4 2020: Bearish Short-Term, Bullish Long-Term
Skerdian Meta • 8 min read
Ripple (XRP), which was co-founded by Chris Larsen and Jed McCaleb, was established in 2012. It started at a miniscule level, but came to life in March 2017, when according to most Ripple broker platforms, it jumped from $ 0.0005 to 0.07, which doesn’t seem like much, but it was the first sign that this cryptocurrency was establishing itself, and that it could survive. 2017 turned into a massively bullish year for digital currencies, with Bitcoin surging very close to $ 20,000 in December, from below $ 1,000 earlier that year, while Ripple surged from around $ 0.20 to $ 3.30, which means a more than 15-fold increase in a couple of months. But, the XRP/USD subsequently made a strong reversal down, as the XRP charts below show, and since then, it hasn’t been able to turn bullish again on the larger time-frame charts. Moving averages continue to cap this cryptocurrency, bringing an end to upward retraces and pushing the price lower. As a result, the technical picture doesn’t seem too promising for Ripple, but fundamentals seem a bit more interesting for buyers, so let’s have a broader look at the factors that might affect the XRP/USD, and forecast the future direction for this altcoin.
Current XRP/USD Price: $
Recent Changes in the Ripple Price
|Period||Change ($)||Change %|
|30 Days||-$ 0.053||-17.4%|
|3 Months||+$ 0.057||+22.8%|
|6 Months||+$ 0.109||+43.6%|
|1 Year||–$ 0.063||–20.1%|
|5 Years||+$ 0.243||+97.2%|
According to general consensus, the cryptocurrency market started with Bitcoin in 2009. But interest was aroused after the major surge in 2017, during the height of the “cryptocurrency gold rush”. However, that surge faded once Bitcoin had reached almost $ 20,000, on the back of social trading rumours, and cryptos retreated lower. The XRP/USD also made a big surge for several weeks, before retreating too. Although, the difference compared to other cryptos is that, while most major cryptocurrencies have resumed their bullish trend now, albeit in a more normal manner than what we saw at the end of 2017, Ripple is still bearish. Since 2018, the highs have been getting lower every time and buyers keep pushing for new lows. The 100 SMA is keeping a lid on this pair, pressuring buyers, as we will explain in the technical analysis below. The $ 200 million in funds that was recently raised, brought some attention back to this altcoin, and the adaptation of Ripple in transactions has been promising, which means that fundamentals are not as bad as the technical charts show, but they are not helping Ripple all that much. So, at the moment, there’s a battle going on between fundamentals and technical factors for Ripple, with the technicals still having the upper hand for the moment.
|Ripple Forecast: Q4 2020||Ripple Forecast: 1 Year||Ripple Forecast: 3 Years|
|Price: $ 78-80 |
Price drivers: Covid-19, Risk Sentiment, RBI Rates
|Price: $ 78-80 |
Price drivers: Covid-19, Risk Sentiment, RBI Rates
|Price: $ 88-90|
Price drivers: Price Drivers: Inflation, Economic Recovery, Developing Markets, RBI Actions, Inflation
Ripple Price Prediction for the Next Five Years
Digital currencies are affected by a number of factors, which we can group into four categories; 1. Fundamentals for each digital currency 2. Technicals 3. The sentiment for the cryptocurrency market as a whole and 4. The performance of the USD, which has become increasingly important this year in particular. Ripple had a successful fundraising event at the end of 2019, which turned this cryptocurrency bullish for several months, but then the broader crypto market sentiment caught up with it in March, as the coronavirus broke out and the USD joined the party, helping the XRP/USD to triple in value. Although the technical picture doesn’t look too promising for Ripple, the fundamentals look brighter in the long term, as recent news has shown.
Recent Developments for Ripple
Ripple Labs is the parent company of Ripple, which started off as OpenCoin in 2012. As of August 2020, in terms of market capitalization, at $ 11 billion, Ripple is the fourth largest altcoin. It provides financial institutions with a medium to transfer value globally, between various fiat currencies. It is basically a bridge currency underlying Ripple’s liquidity and exchange product xRapid. XRP Ledger is the DLT that provides verifiable XRP settlements, and it is open to everyone. So, one of Ripple’s advantages is that it is very adaptive for the broader public, since it is both a digital currency and a payment network.
Peer-to-Peer Project Delayed
Speaking of an adaptive currency, in 2019, an attempt was made, by financial institutions such as UBS Group AG, Barclays Plc, Credit Suisse and Banco de Santander, to create a company. The institutions funded the £ 50 million project. The idea was/is for a peer-to-peer solution to offer tokenized currencies. The name of the company is Fnality, and its purpose is to offer the banks the solution they need, namely the Utility Settlement Coin. But, the attempt has now been delayed, as they are awaiting regulatory approval. According to Rhomaios Ram, CEO of Fnality International, the earliest response time from the regulators will be the first half of 2021, which is almost a year away, and that is not even the final step.
Funds to the Tune of $ 20 Million Raised
Ripple had a good year in 2019. In fact, Ripple CEO Brad Garlinghouse referred to it as the “strongest year of growth to date”. The RippleNet payments network grew to over 300 clients in 2019 and it also partnered with MoneyGram. Ripple made an investment worth $ 30 million initially, and later bought $ 20 million in MoneyGram shares, at $ 4,10, which is a third above the market price value. This means a 10% stake in MoneyGram. The remittance company on the other hand, agreed to utilize Ripple’s products for cross-border settlements.
That was a nice move by a Ripple executive, but it wasn’t all. Ripple raised $ 200 million in funds at the end of 2019, with Japan’s SBI Holdings and VC firm Route 66 Ventures taking part in the Series-C funding round, which was led by alternative asset investment firm Tetragon. Ripple CEO Brad Garlinghouse said: “We are in a strong financial position to execute against our vision. As the growth of others in the blockchain space has slowed or even shut down, we have accelerated our momentum and industry leadership throughout 2019.” Indeed, 2019 was a good year fundamentally for Ripple, and the sentiment improved for this altcoin, despite the delay in the Utility Settlement Coin project.
- The Office of Comptroller of the Currency (OCC) nominated Brian Brooks as the acting Comptroller. Brooks plans to unveil a new payments charter, in the hopes of creating a single federal framework for tech firms to offer services traditionally offered by banks. The OCC also issued an Advanced Notice of Proposed Rulemaking, soliciting comments on, among other things, adoption of crypto-related activities by US banks.
- Former CFTC Chairman J. Christopher Giancarlo published a paper explaining why XRP should not be considered a security under US law and judicial precedent. He is also spearheading The Digital Dollar Project which published a white paper on its proposal for a joint public-private initiative to create a US central bank digital currency (CBDC).
- The Consumer Finance Protection Bureau (CFPB) published its final remittance rule including how digital assets, specifically XRP through ODL, can help significantly lower the cost of cross-border remittances.
- The Indian Ministry of Finance proposed to legally ban cryptocurrencies and impose stiff penalties on citizens who use cryptocurrency. This follows earlier action by India’s Reserve Bank issuing a clarifying statement that India’s commercial banks may provide banking services to traders and firms dealing in cryptocurrencies.
- The Intergovernmental Financial Working Group (IFWG) of South Africa released a position paper that proposes a strict crypto policy framework for the region.
- SEC Commissioner Hester Peirce was nominated for another five year term at the securities agency. Caroline Crenshaw was also nominated to fill a Democratic vacancy on the Commission. Their confirmation hearings were scheduled for July 2020.
- The EU is looking to create a new regulatory regime for digital assets, covering unregulated assets to stablecoins.
- Macro investor Paul Tudor Jones bought Bitcoin as a hedge against inflation, and said his fund may hold as much as a low single-digit percentage of its assets in Bitcoin futures.
- JPMorgan offered bank accounts to cryptocurrency exchanges beginning with Gemini and Coinbase.
- Of nearly 800 institutional respondents to a Fidelity survey, 36% said they owned either digital assets or derivatives.
- New York’s Department of Financial Services granted BitLicense to Eris X.
- Users withdrew over $220 million in BTC from exchanges before and soon after the May halving.
- China completed the backend architecture development of its digital yuan. The rapid development of the digital yuan spurred headlines around China’s potential heavy influence and leadership in the payments industry.
- The People’s Bank of China (PBOC) announced a pilot program to trial its new digital yuan with 19 local businesses, including US chains Starbucks, Subway and McDonald’s.
- PayPal and Venmo plan to add crypto buying and selling to their platforms.
- Brazil suspended the WhatsApp payments service, just a week after the initial roll out.
- Visa signed a partnership deal with Safaricom’s M-Pesa.
- Binance launched a crypto payments app in Nigeria.
- Revolut announced that it is making cryptocurrency available to all its seven million customers.
Covid-19 Sentiment and the Relationship With Bitcoin and the Crypto Market
The coronavirus has impacted the digital currency market as well. The outbreak of the virus in Europe and the US wasn’t received too well by this market, and we saw a big crash from the middle of February until the middle of March. This shows that the digital currencies aren’t going to withhold the pressure in times of crisis, as was hoped. Ripple crashed as well, with the XRP/USD falling from around $ 0.35 to $ 0.11, which means a loss of two-thirds of its value.
Bitcoin has gained in value since February, before the crash
This was in line with the broader crypto market, but the recovery since then hasn’t exactly been in line with the market. While the value of Ethereum has increased more than 5-fold since the low in March, and Bitcoin has increased almost 4-fold, rising to $ 12,500, XRP/USD hasn’t made up for the losses of that crash yet, and its value has risen less than 3-fold. This means that there is some divergence between Ripple and the rest of the cryptocurrency market, including Bitocin. Basically, Ripple is lagging behind in bullish times, and will probably be among the first to turn bearish when the bullish momentum runs out, which is already happening.
Before 2017, the chart for Ripple and most cryptocurrencies was a straight line, so there’s no point in looking at the history of the XRP/USD earlier than 2017. Comparing it to the USD index DXY, we can see that there was a steep decline for the latter in 2017, which picked up pace from May until August. This lasted until the end of the year. We saw a strong increase in the XRP/USD from May until July, which showed a correlation with the decline in the DXY, but then the increase stopped, which means that the correlation was lost. December 2017 and Q1 of 2018 were extraordinary for the crypto market as a whole, with most digital currencies surging higher then reversing lower, so we can’t speak about correlation. But from Q2 of 2018 until early 2020, Ripple has been on a steady decline, while the DXY has been on a steady bullish trend, which shows correlation once again. This year, the correlation has increased further, with the USD surging during the initial panic in February and March, then reversing lower and remaining bearish until late August. The XRP/USD went through a major decline during February and early March, as we have already explained, but it turned bullish until late August, and has retreated lower since then. So, the correlation between Ripple and the USD has increased, which means we should compare both assets when trading the Ripple, but it remains to be seen whether the correlation remains after the coronavirus.
The correlation with the USD hasn’t been very strong since 2017
However, the correlation has increased this year
Technical Analysis – Will Moving Averages Keep Pushing the XRP/USD Up?
SMAs are keeping the bearish trend alive
Since the crypto market hasn’t existed for too long, the larger time-frame charts, such as the monthly charts, don’t help much for analysis. The only thing I can see there is that the 20 SMA (gray) has been topping the price for the XRP/USD since November 2018, when it moved above this level. It has pierced this level now and again, such as in the last two months, but the price seems to have reversed back below it now, making the picture bearish. Besides the 20 SMA, which is working as resistance, the chart setup looks bearish. The XRP/USD formed a doji candlestick in August, which is a bearish reversing signal after the climb in July, and that candlestick has been followed by a bearish candlestick in September so far, which reinforces the bearish reversing chart pattern.
The 200 SMA is keeping the trend bearish on the weekly time-frame
On the weekly chart, the same moving average was acting as some form of support during 2017, before the “Gold Rush” in December 2018. In February 2018, it held as support for some time, once again, following the big reversal, and it has now been acting as support again, together with the 50 SMA (yellow), for two weeks. The 50 SMA has provided resistance a couple of times, but it is also acting as support at the moment. However, the ultimate resistance since December 2018 has been the 100 SMA (green). It turned into resistance immediately that month, after it was broken from above, then the strong retrace higher stopped in May last year, it scared buyers away in February 2020 and it has been providing resistance again since July. So, the 100 SMA is keeping the XRP/USD down and the trend is still bearish here, unlike in most other major cryptocurrencies. But times are not normal now, and the other 2 MAs are holding from below, so the future is not very certain at the moment, although it is likely to keep a bearish bias in the short term, probably until Q2-Q3 of 2021 and then a bullish reversal and a steady climb are likely, as Ripple moves ahead with plans for the Utility Settlement Coin project.