The price of XRP has entered a corrective phase, experiencing a decline of over 15% from its year-to-date high. This downturn occurs despite positive developments surrounding Ripple and increasing inflows into XRP Exchange-Traded Funds (ETFs).
XRP token recently dropped to $2.0520, a significant decrease from its year-to-date peak of $2.4. Consequently, its market capitalization has seen a pullback to $125 billion.
ETF Inflows Show Steady Growth
Despite the recent price retreat, data indicates a climbing trend in XRP ETF inflows. Last week, these funds added $56 million in assets, marking a 47% increase compared to the $38 million recorded the previous week. This week, the inflows have reached $108 million, bringing the total assets under management to $1.52 billion. This amount is equivalent to 1.2% of XRP's market capitalization.
While these figures represent growth, XRP ETFs still have a considerable distance to cover to match the asset allocation of Bitcoin (BTC) and Ethereum (ETH) funds, which currently hold 6.5% and 5.4% of their respective market caps.
Ripple's Regulatory Milestones and Future Demand
The XRP price correction is occurring against a backdrop of significant announcements from Ripple this year. Notably, Ripple Labs has secured licenses from both the United Kingdom and Luxembourg. These regulatory approvals are expected to facilitate broader engagement and partnerships with European companies.
These recent licenses follow closely on the heels of Ripple obtaining a banking charter from the Office of the Comptroller of the Currency in the United States less than a month prior.
Further anticipation for increased XRP demand in the coming weeks stems from the upcoming public debut of Ripple-backed Evernorth through a SPAC merger. Evernorth has already amassed substantial XRP holdings, and its public offering is poised to provide additional capital for further accumulation of the token.
Evernorth intends to generate yield through regulated decentralized finance (DeFi) strategies, which include participating as a validator on the XRP Ledger.
In related developments, a growing number of investors are migrating their XRP tokens to Flare's FXRP, which has successfully accumulated over $150 million in total DeFi value locked (TVL).
XRP Price Technical Analysis
The technical analysis of the four-hour chart reveals that the XRP price has retreated from a high of $2.4165 recorded on January 6 to its current level of $2.05. The token has fallen below the 50% Fibonacci Retracement level, indicating a bearish short-term outlook.
Furthermore, XRP has moved below its 50-day and 100-day Exponential Moving Averages (EMAs), as well as the Supertrend indicator, reinforcing the bearish sentiment.
On a more optimistic note, the chart displays the formation of a double-bottom pattern at the $2.04 level, with a corresponding neckline at $2.188. This pattern is traditionally associated with a potential bullish reversal.
Consequently, the outlook for XRP remains bullish as long as the price can maintain its position above the double-bottom support level at $2.03. A breach below this critical level could signal further downside movement, potentially testing the 78.6% retracement level situated at $1.9127.