XRP (XRP): When it comes to predicting asset prices, good solid research always beats all other prediction methods. That’s why when a price prediction research method comes from an institution as credible as Yale, it’s good to take notes. According to a research by Yale academics Aleh Tsyvinski and Yukun Liu, there are several key pointers that can help determine the direction of a cryptocurrency, namely the momentum effect and attention from the investing public. Let’s apply these two parameters to try and come up with a possible direction that XRP will take in coming days.
1. The momentum effect
According to the Yale research, when a crypto rises in value consistently for a whole week, it tends to perform well in the following week. This because the consistent rise in price draws in more investors, which then has an effect of pushing up the price. Applying this to XRP, we can see that last week the value of XRP dropped, albeit by a small margin. This has been followed by the drop we have seen this week. Though the drop we have seen this week has been accelerated by the bitcoin ETF news, but overall it was still going down. Going forward, if XRP continues to drop all through this week, then chances are that it could perform dismally next week.
2. Investor attention
The Yale researchers found that a consistently high positive mention of a cryptocurrency by the investing public and the media has a positive effect on the price. Similarly, a consistently high presence of negative news about a crypto such as those related to hacks have a negative impact on the price. Using this metric to analyze XRP (XRP), it becomes apparent that the price of this crypto might begin to rise in value in coming days. That’s because even though the price is low, there is an increased amount of positive news around it at the moment. For instance, yesterday there were news that Bittrex will start USD-XRP pairing starting on the 20th of this month. This comes in the wake of news that more exchanges are adding XRP as a base currency, and even better news of the entry of XRP-inclined SBI into the Chinese market, through a joint venture. All these news create the impression that there is an air of positivity around XRP.
Verdict Going by the Yale research, we can predict that in the coming week, XRP (XRP) will most likely trade in a range with minor up and down fluctuations. That’s because the momentum effect and the investor attention parameter counteract each other. While there is a high positive mention of XRP at the moment, the price momentum is negative. The crash between these two eliminate the chances of the price rising up substantially in the coming week. It also acts a support for the price, and reduces chances of the price going into free fall. This creates an opportunity for long-term investors to take positions.