Ripple (XRP) Price $2, Is it Overvalued or Still Cheap?

Bittime - The price of XRP has taken center stage in the digital asset market after experiencing a significant rally in November. Currently, XRP is trading at around $2.23, and many investors are starting to question whether this price is already too high or still has the potential to rise further.

While XRP has yet to experience a significant correction, recent analysis has shown signs of overvaluation that holders should be aware of.

One indicator that shows potential overvaluation is XRP's Network Value to Transaction (NVT) ratio. This metric compares XRP's market capitalization to the volume of transactions taking place on the network.

A spike in the NVT ratio indicates that XRP's price growth is not keeping pace with the underlying transaction activity. With a high NVT ratio, there are concerns that the price of XRP may not be sustainable if the transaction volume does not increase to support such price increases.

Also read: XRP Price Predicted to Break $13 per Coin

Network Activity and Divergence

In addition to the NVT ratio, network activity analysis also shows a worrying trend. The divergence between the XRP price and the number of daily active addresses (DAA) shows that despite the surge in XRP price, the number of wallets actively interacting with the token is actually decreasing.

The 326.13% drop in DAA suggests that the price surge is not supported by increased user engagement on the network. If user activity remains low, this could undermine XRP's bullish momentum and increase the risk of a significant price correction.

This raises questions about the sustainability of XRP's price rally. If there is no increase in on-chain activity, investors may have to brace for further potential price declines. In this scenario, XRP price could drop to $2.05 or even $1.90 if bearish pressure persists.

Market Sentiment and Short-term Outlook

Looking at the XRP price chart, the token is currently under bearish pressure. Despite attempts to reach the $2.40 level, XRP faced resistance at $2.35, which led to a drop to $2.31. The MACD indicator shows that bearish sentiment still dominates, with the 12 and 26-period EMAs in negative territory.

However, if renewed buying interest emerges, it is possible that the price of XRP could return to the $2.73 level. Traders need to watch for a break above $2.35 to confirm bullish potential in the short term.

With uncertain market conditions, caution remains the best strategy for investors considering entering new positions in XRP.

Also read: XRP ETF and the Soon-to-be-Closed Ripple vs SEC Case

Conclusion

With XRP's current price at $2.23, analysis shows that there is a potential overvaluation that needs to be considered. The high NVT ratio and declining network activity could be a signal that the current price rally may not be sustainable.

Investors should remain alert to changes in market dynamics and consider the risks involved before making an investment decision.

FAQ

What does the NVT ratio mean in the context of XRP price?

The Network Value to Transaction (NVT) ratio is a metric that compares the market capitalization of XRP to the volume of transactions taking place on the network. A high ratio may indicate that the XRP price may be too high compared to the underlying transaction activity.

Why is network activity important for the XRP price?

Network activity, such as the number of daily active addresses, is important because it shows how many users are interacting with XRP. If the XRP price increases but user activity decreases, this could be a sign that the price rally is not supported by strong demand, increasing the risk of a correction.

What should investors watch out for regarding the current XRP price?

Investors should pay attention to the NVT ratio, network activity, and technical indicators such as MACD to understand the potential price movement of XRP. Monitoring resistance and support levels is also important to determine whether the XRP price will continue to rise or experience a decline.

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Referensi

ambcrypto.com, Harga XRP $ 2,23: Overvalued atau siap untuk kenaikan lagi?, diakses 23 Desember 2024.

Penulis AWW