XRP price is close to losing the profits the altcoin witnessed in the first week of November. One of the biggest catalysts when it comes to price action is the use cases of Ripple and XRP among banks, as well as their exposure to this altcoin. However, by the looks of it, Ripple has lost that crown to Polkadot.
Ripple, according to a recent report from The Basel Committee on Banking Supervision (BCBS), has been eclipsed by Polkadot. The Committee is a bank regulation authority with about 45 top banks across the globe as members.
Their report accounted for the crypto asset data from 19 banks, of which ten belonged to North America, seven to Europe, and three others from other regions of the world. Collectively, these banks have reported $10.27 billion in crypto asset exposure at the moment.
Interestingly, Polkadot accounts for a smidge more exposure than Ripple, coming up to 2.1% of the total amount. Ripple, on the other hand, only contributed 1.9% to the $10.27 billion crypto exposure. This speaks to the adoption of not just crypto assets but also XRP among the banks, as these financial institutions remain cautious.
Crypto asset exposure
Earlier last week, the Federal Reserve Vice Chairman for Supervision, Michael Barr, commented on the risks of crypto to the banks, saying that most banks are taking a careful and cautious approach when it comes to digital assets, saving them from witnessing major risks.
The recent rally was expected to jumpstart Ripple’s bull run. However, until broader market cues, as well as macro-financial conditions, turn bullish, the rally might not stick.
XRP price has noted a 13.67% decline in the past two weeks, falling from $0.715 to trade at $0.616 at the time of writing. The drawdown has wiped out nearly half of the gains witnessed by Ripple investors in the past couple of days, bringing the altcoin close to falling through the support line at $0.600.
This level has been tested as both support and resistance in the past and presently acts as a crucial support line. Bouncing off this line would save Ripple investors from registering further losses on their holdings and revive the price rise to push XRP toward $0.644.
The Relative Strength Index (RSI) has not broken below the neutral line at 50.0, which suggests it has a shot at noting a bullish outcome.
XRP/USD 1-day chart
However, if the $0.600 support line is lost, the bullish thesis would be invalidated on the short-term scale. RSI falling below the 50.0 mark would serve as a confirmation of the same and might draw XRP price down to $0.551, potentially wiping out all the gains noted at the beginning of the month.
The developer or creator of each cryptocurrency decides on the total number of tokens that can be minted or issued. Only a certain number of these assets can be minted by mining, staking or other mechanisms. This is defined by the algorithm of the underlying blockchain technology. Since its inception, a total of 19,445,656 BTCs have been mined, which is the circulating supply of Bitcoin. On the other hand, circulating supply can also be decreased via actions such as burning tokens, or mistakenly sending assets to addresses of other incompatible blockchains.
Market capitalization is the result of multiplying the circulating supply of a certain asset by the asset’s current market value. For Bitcoin, the market capitalization at the beginning of August 2023 is above $570 billion, which is the result of the more than 19 million BTC in circulation multiplied by the Bitcoin price around $29,600.
Trading volume refers to the total number of tokens for a specific asset that has been transacted or exchanged between buyers and sellers within set trading hours, for example, 24 hours. It is used to gauge market sentiment, this metric combines all volumes on centralized exchanges and decentralized exchanges. Increasing trading volume often denotes the demand for a certain asset as more people are buying and selling the cryptocurrency.
Funding rates are a concept designed to encourage traders to take positions and ensure perpetual contract prices match spot markets. It defines a mechanism by exchanges to ensure that future prices and index prices periodic payments regularly converge. When the funding rate is positive, the price of the perpetual contract is higher than the mark price. This means traders who are bullish and have opened long positions pay traders who are in short positions. On the other hand, a negative funding rate means perpetual prices are below the mark price, and hence traders with short positions pay traders who have opened long positions.