XRP is currently in a state of volatility, which is evident from the Average Sentiment Oscillator (ASO), a metric used to measure market sentiment. In an X post on Monday, analyst Egrag Crypto pointed out that the ASO sends mixed signals to XRP traders and confuses them regarding the current market cycle. Although the ASO has predicted previous bullish crosses and some key time frames, it now suggests that the market is directionless.
#XRP ASO Average Sentiment Oscillator – (UPDATE):
🚨 Quick Brief on ASO (Average Sentiment Oscillator)
The ASO is a powerful tool designed to capture the emotional pulse of the market! 📊 It helps traders gauge whether the majority of participants are feeling optimistic… https://t.co/xrHywH1XgQ pic.twitter.com/e1hIjRx34Q
— EGRAG CRYPTO (@egragcrypto) September 30, 2024
Measuring Market Sentiment
The ASO is used to determine the market mood and decide whether the overall market sentiment is positive or negative for the traders. Price, volume, and social sentiment are some of the most common factors that the ASO uses to determine if the market is overbought or oversold.
According to Egrag, this market cycle is different from the previous ones. In the past three years, there has been no strong dominance of the XRP market as it has been in a specific channel. Some of the signs from the ASO are confusing and do not help the market situation.
Divergence Signal Issues
Among the problems is identifying the clear divergence signals from the ASO. In a normal market situation, the difference between price and sentiment signals can be used to look for a potential trend reversal or confirmation. However, with XRP, this divergence has to be confirmed, which makes it almost impossible to define any strong tendency or reversal on the market.
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Egrag’s view that XRP is being heavily manipulated only makes the matter more confusing. He noted that XRP has traded within a range for three years, with the bulls and bears failing to sustain a strong trend. The analyst proposed that the current formation in the ASO is designed to flush out the bullish and bearish traders.
Long-Term Holding Strategy
Given these circumstances, Egrag Crypto suggested that XRP investors think long. He advised against making short-term trades and to rather hold onto XRP until large price fluctuations are observed. As of press time, XRP is trading at $0.6297, showing a 0.79% rise over the last day.
Due to the uncertain sentiment around XRP, it is advised that traders continue to be patient and not get carried away by the small gains. Until the ASO sends more definitive signals it may be best to anticipate a breakout or trend-line crossover.
