XRP (XRP) dropped by nearly 6% at some point during the session as the market was spooked by a significant spike in the U.S. Producer Price Index (PPI).
Analysts were expecting a 0.5% increase in the PPI compared to the previous month but instead got a surprising 1.3% increase, indicating that higher energy prices continue to put upward pressure on wholesale prices.
Similarly, the monthly variation in the Core PPI was 0.7% compared to 0.3% analysts expected for September and up 50 basis points versus the previous month.
Paired with the spike seen in the Consumer Price Index (CPI) yesterday, which also surpassed the market’s expectations, this could have set the stage for a more dramatic correction. However, bulls managed to defend that $1.32 area and ultimately pushed XRP to a session high of $1.34.
Crypto Liquidations Accelerate While Net Inflows to XRP ETFs Dry Up in October
As a result of today’s recovery, XRP could now resume its rally toward the $1.80 target we have set forth in previous price predictions.
Crypto liquidations have accelerated to $1.7 billion in the past 4 days alone, as a long squeeze was progressively unfolding. However, in the last 12 hours, over $100 million worth of short positions were blown up as a result of the market’s post-PPI U-turn.
Despite the recovery, net inflows to exchange-traded funds (ETFs) linked to XRP reflect the market’s depressed sentiment toward the token right now, as investors have only poured $13 million into these vehicles in October.
A simple run rate of this figure for what remains of the month results in a forecasted total of $26 million, which would represent a 79% decline compared to September.
That said, the selling pressure could ease in the next few days, as on-chain data indicates that net inflows to exchanges have been decreasing.
We flagged a strong spike in this metric between September 10 and September 27, but have seen a subsequent decrease, indicating that investors are no longer moving their tokens to liquid marketplaces.
This could give buyers the chance to overpower the selling pressure, as they did today, especially if XRP remains near key areas of support.
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See all Ripple forecastsXRP Needs to Recover the $1.32 Zone to Keep Rallying
Turning to the daily chart, we saw a positive reaction during the American session immediately after XRP dipped below $1.32. This has been the key support to watch for us for weeks. Hence, even though the price action briefly dipped below this mark, buying volumes seem to be strong at this level.
If the token stays above this mark today, this pullback could have found its floor already, and a recovery may start as buyers have trapped bears. This could prompt a massive short squeeze if XRP starts moving past former areas of resistance.
However, we would still need the price to rise past $1.45 to confirm a trend reversal. For the time being, the baseline scenario continues to be bearish, with XRP potentially eyeing a retest of $1.25 if this surprising PPI report increases the selling pressure during the rest of the week.
