- Despite a 37% price correction from its 2023 peak, Ripple’s (XRP) network activity remains strong, a fact belied by its languishing price around $0.50 support levels.
- On-chain metrics suggest that XRP’s price could face another setback if long-term holders continue to sell, potentially pushing the price as low as $0.45.
A Complex Dance: XRP Price and Investor Behavior
Ripple’s native token, XRP, is undergoing tumultuous times. Despite a stable XRP Ledger (XRPL) network activity, the cryptocurrency has approached the precarious $0.50 support level as bearish forces defy yet another bounce-back attempt. What on-chain analytics reveal could shed light on this seemingly contradictory landscape.
Long-Term Holders: A Potential Time Bomb?
On-chain analytics bring into focus a disconcerting pattern among long-term holders of XRP. Data around the “Mean Coin Age,” which measures the average number of days coins have been held without being transacted, indicates an unsettling trend. The Mean Coin Age has seen noticeable drops, usually preceding XRP’s significant price corrections. Essentially, a decreasing Mean Coin Age suggests that long-term investors are offloading their holdings.
This finding is not trivial; long-term holders serve as a market stabilizer. Their willingness to offload assets points to an erosion of confidence, which, if continued, could set the stage for further price pullbacks in the near future.
The Tale of Two Ratios: NVT and MVRV
In contrast to the bearish sentiment among long-term holders, the Network Value to Transaction Volume (NVT) ratio has been on an uptrend since early August. A high NVT ratio typically signals robust network activity relative to price movements, which should conventionally translate to a bullish market sentiment. However, XRP’s recent price actions defy this logic, suggesting that external factors may be at play.
Then comes the Market Value to Realized Value (MVRV) ratio, an insightful metric that gauges investor profitability. According to MVRV data, newer investors would incur a 13.2% loss if they were to sell at the current $0.51 price point, while those who invested 180 days ago would incur almost half that loss at 6.7%.
In light of these ratios, it becomes clear that the divergence between on-chain metrics and XRP’s price is not due to the network’s health but likely stems from the bearish trading activity among long-term holders. If this group continues to close their positions, especially those who bought XRP during the SEC turbulence and are sitting on smaller losses, we may witness a price slide to as low as $0.45, thereby triggering another bearish cycle for Ripple’s XRP.