XRP’s NVT ratio indicates overvaluation
The Network Value to Transaction (NVT) ratio for XRP highlights a potential risk of overvaluation despite the recent rally. The metric compares the asset’s market capitalization to transaction volume and provides insight into whether the price is sustainable.
Source: Cryptoquant
XRP’s NVT ratio fluctuated widely in December, indicating instability. The current spike in the ratio reflects a discrepancy between the price of XRP and the underlying transaction activity on the network.
Although the price is $2.23, the high NVT ratio indicates that market capitalization growth is faster than that of network companies, which is a bearish sign. Unless transaction volumes catch up, XRP could face greater correction risks, testing the bullish momentum of recent weeks.
XRP: Reduced Network Activity?
The difference in Price-Daily Active Addresses (DAA) reveals a worrying trend for XRP’s rally. This metric assesses whether price movements align with users’ engagement on the network.
While the price of XRP rose to $2.23, the DAA divergence has plummeted by 326.13%. This sharp decline indicates a decline in the number of active XRP wallets interacting with the token.
Source: Santiment
Such a sharp difference suggests that the recent price spike is not supported by robust on-chain activity.
If user engagement remains low, it could undermine XRP’s bullish momentum and increase the risk of a significant price correction, putting pressure on the current rally.
Read XRP’s 2024-2025 Price Prediction
The bearish momentum continues
On the 4-hour chart, XRP remains under bearish pressure. The price tried to reach USD 2.40 but faced resistance at USD 2.35, causing a decline to USD 2.31. The MACD indicator shows that the 12- and 26-period EMAs are in the negative region, reinforcing bearish sentiment.
Source: TradingView
With momentum waning, XRP risk drops further to $2.05 and possibly $1.90 in a strongly bearish scenario. However, renewed buying interest could push the price back to $2.73.
As the token consolidates around $2.24, traders should look for a breakout above $2.35 or a continued downtrend.
The MACD’s position underlines caution regarding near-term bullish expectations.
