Crypto analyst who goes by the pseudonym Steph Is Crypto spotted a double bottom or ‘W’ pattern appearing on the XRP monthly chart. The double bottom pattern is usually a bullish reversal signal where the token’s price is supported twice. Inside the ‘W’ pattern, the prices initially drop due to selling pressure, and eventually at some point, it reaches the support level, where the buyers step in. After buyers step into the market to stop the falling prices from falling further, the token recovers and has a short-term upward trend, and reaches the neckline before falling again and repeating the process. Once the double bottom pattern is completed the token break out.
On the weekly chart, XRP has been gaining value. From a weekly opening market price of $2.27, the token has now reached $2.94, gaining almost 30% during the past week. The XRP 24-hour trading volume has also increased by almost 70% to 11.48 billion, as the market cap sits at $175 billion.
XRP open interest and funding rates increase
On the fundamental side, the XRP futures open interest has increased from $3.5 billion in the last week of June to 7 billion as of present. When the future open interest increases, it means that the traders are invested in the futures market of XRP and they are opening new contracts.
In addition to the open interest increasing, the funding rate is also in the positive region, reading a value of 0.0125%. When the funding rate is positive, it means that the long position holders are paying the short position holders funding fees.
This mechanism of funding rate exists in the market to keep the perpetual market price close to the spot market price. If not for the funding rates, the market equilibrium would be lost, and it might either result in perpetual market trading at a very high price or far less than the spot market. Traders might stack up on one side (e.g., everyone going long in a bullish market), creating imbalanced leverage. Funding helps rebalance this by making overcrowded positions more expensive to hold.
XRP is on its way to $3.5
On the daily chart, XRP has taken the shape of a bullish ‘W’ pattern. Since XRP has completed the pattern, now it is a matter of waiting for it to break above the $3.2 resistance level. However, at press time the RSI indicator shows that the XRP market is overbought, as such, it may go through a market correction before it continues its uptrend. Once the XRP market has corrected the prices, the token could reach as high as $3.5 in the coming days.
With the XRP ETF approval pending, the community would be anticipating the approval in the coming days. When XRP ETF gets approved, there is a high chance that the token could crash above the $3.5 level.
