The XRP token staged an impressive 50% rally throughout January, outperforming the wider cryptocurrency market. Technical chart patterns are now targeting a longer-term breakout above $4 in the future.
What makes XRP gain another 50%?
XRP (XRP) rose over 50% during the past month, outperforming Bitcoin’s (BTC) 13% rally and Ether’s (ETH) near 4% decline, Cointelegraph Markets Pro data shows.
XRP, BTC, ETH, 1-month chart. Source: Cointelegraph
XRP token decoupled from the rest of the market due to positive regulatory developments for Ripple Labs, which received approval for its RLUSD stablecoin from the New York Department of Financial Services (NYDFS) on Dec. 10, Cointelegraph reported.
Another reason behind XRP’s price surge is its increased adoption by financial institutions, according to Santiment. The crypto intelligence firm wrote in a Jan. 29 post:
“XRP has recently been recognized by more major financial institutions and its integration into various payment systems has bolstered investor confidence. Among these has been Ripple's partnership with Ondo Finance, allowing tokenized U.S. Treasury securities to the XRP Ledger.”
Ripple Labs also secured money transmitter licenses in the states of Texas and New York, adding to the blockchain payment firm’s over 50 licenses across global jurisdictions.
Related: Ripple exec ‘hopeful’ next SEC chair will withdraw enforcement case
XRP price targets breakout to $4 by March
XRP’s price may be setting up for a breakout above $4 before the end of February, according to emerging technical patterns shared by popular crypto analyst Dark Defender.
The analyst wrote in a Jan. 30 X post:
“XRP is pending confirmation on 4-hour and 1-day time frames for the breakout. The short-term target is $4 with Sub-Wave 5, and the Support is $3.07.”
XRP/USD, 1-day chart, breakout pattern. Source: DarkDefender
The Bollinger Bands, which are volatility indicators used to provide probable entry and exit opportunities for crypto trading, also suggest an imminent breakout.
“The Bollinger Bands on XRP’s daily are tightening significantly, signaling an explosive move ahead,” wrote crypto investor Armando Pantoja, in a Jan. 29 X post.
XRP/USD, 1-day chart., Bollinger Bands. Source: Armando Pantoja
Still, XRP traders should be aware of a potential bull trap forming below $2.95. While the altcoin bounced strongly from its early week lows at $2.70, the recovery formed liquidity pockets that may be exploited on the downside.
XRP liquidity pocket entries. Source: Cointelegraph/TradingView
With $3 being a key support level, most long traders might have their stop losses just under $3, where market movers would push the prices to collect liquidity. With a strong 1-hour fair value gap and order block overlapping between $2.98 and $2.90, this could be the potential bid and reversal range for XRP.