XRP Price Prediction: Brace For More Devaluation as Bitcoin Correlation Spells Trouble

XRP's strong correlation with Bitcoin (BTC) might be limiting its performance, as the token has remained relatively muted over the past two months.

XRP’s close correlation with Bitcoin (BTC) may be hindering its performance, as the token has shown a muted response to several events that would typically trigger positive price movements.

Despite reports revealing that Donald Trump raised over $4 million in campaign donations through digital tokens, including XRP, this news had no impact on XRP’s price. Additionally, the altcoin showed no reaction when a large transfer of 33 million tokens to a Binance wallet occurred on August 22.

Furthermore, after Ripple announced plans to introduce smart contracts to the XRP Ledger (XRPL), XRP’s price dropped by 3%, exhibiting an inverse correlation to BTC’s price movements.

Ripple’s announcement of plans to introduce smart contracts to the XRP Ledger (XRPL) would typically spark a positive price reaction for XRP. However, the altcoin’s strong correlation with Bitcoin (BTC) has resulted in a muted response.

This correlation is evident in the correlation coefficient between XRP and BTC, which stands at 0.72, indicating a reasonably strong positive relationship.

Over the past 24 hours, Bitcoin’s price has dropped by 4%, and XRP followed with a 3% decline. Interestingly, despite this drop, XRP’s trading volume surged by 39%, creating a negative divergence.

Such divergence usually indicates increasing selling pressure, suggesting XRP could face further decline.

XRP’s negative price-to-daily active address divergence further confirms the increase in selling activity. This metric tracks the asset’s price movements and compares them with changes in the number of daily active addresses.

At press time, XRP’s price-to-daily active address divergence is -63.81, indicating reduced participation in buying, selling, or holding XRP, which could contribute to continued price pressure.

XRP is currently trading at $0.55, and its 12-hour chart suggests further decline. The token’s MACD line (blue) sits below its signal line (orange) and the zero line, indicating a strong bearish trend.

This setup signals a continued downtrend unless a reversal occurs, prompting traders to either avoid the market or consider short positions.

Moreover, XRP’s bull-bear power, measured by the Elder-Ray Index, reveals that sellers dominate the market. The index is currently at -0.035, and it has remained negative since August 26, indicating bear power is in control.

If bears continue to outpower bulls, XRP’s price could drop to $0.52. Should this level fail to hold, a further decline to $0.46 may follow.

However, if market sentiment shifts to bullish, XRP could rise to $0.56.

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