This Ripple Dip Is a Crypto Gift Coming off Its Two-Year High

Suffice it to say that November has been one heck of a month for investors of cryptocurrency coins like Ripple, also known as XRP. The crypto trading community paid close attention to the roller coaster ride in Bitcoin (BTC), but the move in Ripple was even bigger and wilder.

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The recent price moves in Ripple, as we’ll soon discuss, reminded investors that crypto currency can move sharply in both directions.

As cautious crypto investors, we must always keep in mind that volatility is normal and position sizes should be moderate.

As the world’s third-largest cryptocurrency in terms of market value, Ripple is sometimes considered a go-to cryptocurrency asset for folks seeking a cheap coin that could potentially double in value. But as November reminded us, it doesn’t just go up and it has the potential to drop sharply. Can an argument be built in favor of a post-correction position in Ripple, then?

A Closer Look at Ripple

When discussing the price action of XRP, we have to keep things in perspective. Ripple has gone as high as $3.40 in the past, but that might not be a realistic target price in 2020.

XRP is known for being popular with banks and institutions, but it’s also a nimble trader’s paradise. Ripple was stuck at around 20 cents for much of 2020. However, the Ripple price spiked above 30 cents for a quick gain in February, and then again in August.

October seemed fairly sedate as XRP hovered near 24 or 25 cents week after week. Then, stunningly, Ripple shot up to 73 cents in November.

I constantly encourage traders to take profits when an asset doubles or triples in price. XRP provided a textbook example of this in November. After reaching its highest price in two years, Ripple soon crashed to 48 cents.

That short-term bottom was reached on Nov. 26, and as of Nov. 28, XRP was back up to 63. So, the worst might be over for Ripple investors. Besides, the trend is still to the upside and $1 is now a possibility for the Ripple bulls.

After the XRP Rip and Dip

Given the recent swift price movements, it’s difficult to predict where Ripple might go next. For XRP bulls, though, the runway to higher prices is clear and dip-buyers should take advantage of the situation.

The assessment provided by Credible Crypto is a fair representation of how some other XRP bulls feel.

To be able to buy $XRP anywhere between .38-.55 is a blessing. If you get this chance, you best take it,” Credible Crypto tweeted.

This stance is, of course, based on the idea that the bull market in Ripple will persist. There’s merit to this idea as institutions appear to be increasingly accepting cryptocurrency as a legitimate store of value and means of monetary transaction.

BlackRock (NYSE:BLK) CIO of Fixed Income Rick Rieder even went so far as to say that cryptocurrency is “durable” and “here to stay.” That’s an eye-opening statement from an executive at the world’s largest asset manager.

Don’t Fear the Correction

Some traders might have been shaken out of the trade during the correction in Ripple. That’s unfortunate, as the price drop isn’t necessarily a sign of real trouble.

After all, it’s perfectly normal for an asset to retrace after it doubles or triples in value. The “smart money” (institutional investors) are likely to take profits after a move of that magnitude.

Another probable factor in the correction was Coinbase CEO Brian Armstrong’s Nov. 25 statement suggesting that the U.S. government might impose tougher regulations on cryptocurrencies.

“Last week we heard rumors that the U.S. Treasury and Secretary Mnuchin were planning to rush out some new regulation regarding self-hosted crypto wallets before the end of his term,” he said.

Ripple investors shouldn’t feel the need to dump their holdings based on Armstrong’s tweet. Rumors don’t always come to pass, and besides, a “regulation regarding self-hosted crypto wallets” won’t necessarily have a negative impact on the overall institutional adoption of Ripple.

The Bottom Line

Clearly, Ripple isn’t for the faint of heart. The XRP price, as we’ve learned (or re-learned) in November, can rise or fall very quickly.

Yet, if you can handle the volatility, then a moderately sized position could be warranted as institutions start to nibble at Ripple.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.


Article printed from InvestorPlace Media, https://investorplace.com/2020/12/after-reaching-a-two-year-high-the-ripple-dips-a-crypto-gift/.

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