news 
XRP’s $2.23 price tag: Overvalued or ready for another bull run?
The recent surge in XRP’s price has left investors and traders alike questioning whether the cryptocurrency is overvalued or poised for another bull run. As the token consolidates around $2.23, it’s essential to examine the on-chain metrics that suggest potential risks of correction.
XRP’s NVT ratio spikes, signaling a potential overvaluation despite its price surge
Plummeting active addresses divergence raises doubts about the sustainability of XRP’s rally
While many were expecting a market correction, XRP has yet to experience a significant pullback, leaving investors on edge. Recent on-chain analysis suggests that XRP might be overvalued when compared to broader market conditions, fueling concerns about its future price trajectory and potential risks for holders.
XRP’s NVT ratio signals overvaluation
The Network Value to Transaction (NVT) ratio for XRP highlights a potential risk of overvaluation despite recent rally. The metric compares the asset’s market capitalization to its transaction volume, providing insights into whether its price is sustainable.
XRP’s NVT ratio has fluctuated sharply in December, indicating instability. The current spike reflects a disconnect between XRP’s price and underlying transaction activity on the network. While the price sits at $2.23, the high NVT ratio signals that market capitalization growth is outpacing network utility, a bearish sign.
Unless transaction volumes catch up, XRP may face heightened correction risks, challenging the bullish momentum observed in recent weeks.
XRP: Reduced network activity?
The Price-Daily Active Addresses (DAA) divergence reveals a concerning trend for XRP’s rally. This metric assesses whether price movements align with user engagement on the network.
While XRP’s price surged to $2.23, the DAA divergence has plummeted by 326.13%. This stark decline indicates a drop in the number of active XRP wallets interacting with the token.
Such a sharp divergence suggests that the recent price spike is not being supported by robust on-chain activity. If user engagement remains low, it could undermine XRP’s rally and potentially trigger a correction.
XRP risks further drops to $2.05 and potentially $1.90 in a strongly bearish scenario. However, renewed buying interest could push the token back to $2.73.
As the token consolidates around $2.24, traders should monitor for either a breakout above $2.35 or continued downtrend.
The MACD indicator highlights caution for bullish expectations in the short term.
Disclaimer: The content is meant to be informational in nature and should not be interpreted as investment advice.
Source: ambcrypto.com
