While the XRP price has fallen more than 30% over the past month, fresh exchange data from Binance suggests that the sell-off may be coming to an end. Specifically, the Binance cumulative volume delta (CVD) data indicates that a bullish reversal is likely in the near term.
Binance CVD turns negative for XRP
According to CryptoQuant analyst Arab Chain, the relationship between XRP’s CVD on Binance and the 30-day correlation coefficient gives a hint about what might be in store for the fourth-largest cryptocurrency by market cap.
For the uninitiated, CVD measures the net difference between aggressive buy orders and sell orders over time, showing whether buyers or sellers are in control of the market. A rising CVD shows strong buying pressure, while a falling CVD pressure shows that the sellers are dominating the market.
In the same vein, the 30-day correlation coefficient measures how closely an asset’s price tracks its CVD over the past 30 days. A high positive correlation coefficient shows that price changes in the asset closely follow buying/selling forces. In contrast, a low or negative reading indicates that the price is independent of the order flow.
Fresh data shows that while XRP is exchanging hands at around $1.32, the CVD currently stands at -728,000 XRP – showing net selling pressure on the Binance crypto exchange in recent periods.
The reading shows that the volume of executed sell orders is greater than that of executed buy orders, evident from XRP’s weak price performance compared to previous levels.
Meanwhile, the 30-day correlation coefficient shows a positive value of close to 0.68 – confirming that the price changes in XRP are closely related to the prevailing buy/sell forces.
Bullish phase ahead for XRP?
Historical data shows that periods during which negative CVD readings coincide with price stabilization or a slowing rate of decline have typically led to a gradual improvement in momentum.
Put simply, continued sell-off without a meaningful increase in further decline in the asset price points toward possible seller exhaustion. That said, continued XRP inflows to Binance crypto exchange caution that the worst may not be over yet for the cryptocurrency.
