Ripple-associated XRP has experienced a price decline over the past few days, dropping to $2.385 on May 15. In contrast, reserves of the cryptocurrency on the Binance exchange have remained stable at nearly 2.89 billion tokens.
The chart from CryptoQuant shows a disconnect between exchange holdings and XRP’s value, which has attracted the attention of traders and analysts. Between May 9 and May 13, there was a steady rise in XRP’s price, reaching almost $2.575 before the start of the recent pullback.
Long-term holder confidence in XRP
Despite the price changes during this period, the exchange reserves (the purple line) have remained nearly the same. This trend suggests that long-term XRP holders aren’t in a rush to sell their holdings following the price drop.
Usually, the simultaneous drop in an asset’s exchange reserves and price means that investors are moving their holdings to private wallets to hold over the long term. However, a sign of panic selling is a drop in price alongside a sharp increase in reserves.
The current CryptoQuant chart shows stability in exchange reserves. This suggests that holders are confident in XRP’s long-term potential. The 7-day chart also shows that XRP price and exchange reserves moved in the same direction from May 9 to May 11.
But on May 12, there was a wide divergence between the exchange reserves and XRP price. While the price continued to rise until May 13, the reserves remained stable.
Analysts believe that the price changes over the past seven days could be a result of trading activity on other cryptocurrency exchanges or derivative products, and not any spot selling pressure on Binance.
Possible bullish continuation pattern
Based on a close analysis of the XRP price movement over the past seven days from CoinMarketCap data, some analysts have identified the possible formation of a bull pennant.
This pattern starts with a sharp upward price movement (the pole), followed by a period where the price trades within a narrow range (with its shape resembling a pennant).
In the case of XRP, the strong movement in the upward direction happened earlier this week, and the price movements that have followed could mean the token is in its consolidation phase. Should the pattern form completely, then the coin could continue in its upward direction.
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