This is a daily technical analysis by CoinDesk analyst and Chartered Market Technician Omkar Godbole.
The ratio between payments-focused cryptocurrency XRP and bitcoin’s (BTC) dollar-denominated prices has triggered its first golden cross on the weekly chart, indicating a bullish shift in momentum.
A golden cross occurs when the 50-day/week/month simple moving average (SMA) crosses above the 200-day/week/month SMA to indicate that the short-term trend is now outperforming the broader trend, with the potential to evolve into a major bull run.
The crossover confirmed on XRP/BTC’s weekly chart increased the likelihood of the ratio breaking out of its four-year-long sideways channel, hinting at a major XRP bull run relative to bitcoin.
The ratio has been locked in a narrow sideways trend since late 2020, with regulatory uncertainty keeping XRP from cheering the crypto market bull run.
However, last month, the Securities and Exchange Commission (SEC) dropped its appeal against a favourable ruling for the XRP user Ripple, which established that XRP is not a security when sold to retail investors on public exchanges.
In other words, a significant obstacle has moved out of the way, clearing the path for a breakout, suggested by the golden cross.
The potential breakout could trigger a substantial rally, driving valuations to record highs. Markets tend to build energy during consolidations, which is then released in the direction of the eventual breakout. Thus, the longer the consolidation, the more pronounced and rapid the resulting price movement is likely to be.
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