The Ripple price made a cautious relief rally on Monday as investors remained optimistic about cryptocurrencies. The XRP token rose from this week’s low of $0.8615 to the current level of $0.9550, bringing its total market value to more than $44 billion.
Cautious rebound
The XRP price declined sharply on Monday as the sell-off in most assets accelerated. Global indices like the Dow Jones, S&P 500, and the German DAX declined by more than 1.5% as the fear and greed index declined to the highest level this year.
Commodities like iron ore and copper also declined while the market capitalization of all cryptocurrencies tracked by CoinMarketCap declined to below $2 trillion.
This decline and fear was triggered by several factors. First, investors were afraid of contagion as a large Chinese property developer stared at bankruptcy.
China Evergrande has more than $300 billion in debt and is expected to miss its two interest payments this week. Analysts expect that the Chinese government and the People’s Bank of China (PBOC) will not intervene to save the company. As such, investors were afraid of contagion as the company goes out of business.
Other risks that pushed the fear and greed index lower were the debt ceiling issue and the surging gas prices in Europe.
Looking forward, the next key catalyst for the XRP price and other digital currencies is the Federal Reserve. The Federal Open Market Committee (FOMC) will start its September meeting today and deliver its decision on Wednesday.
The FOMC is expected to leave its interest rates intact as it continues to provide support for the economy. Still, most assets will react to the guidance of future interest rates and the schedule for unwinding quantitative easing (QE).
In theory, the XRP price would struggle if the Fed sounds hawkish. However, the opposite will likely happen since the FOMC statement has already been priced in by the market.
Ripple price forecast
The daily chart shows that the XRP price has been declining in the past few days. The coin has dropped by 33% from its highest level this month. It has moved below the neckline of the double-top pattern at $1.0586.
At the same time, it has moved below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved to 40. Therefore, for now, this relief rally could be part of a dead cat bounce, meaning that it could retreat in the next few days.
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