Is XRP Overvalued? These Indicators Suggest It Could Be
Is XRP overvalued? This is a question that has been asked by the broader market since the altcoin explosion began in November.
While some hope that XRP price gains will subside, a major correction has yet to occur. However, according to this On-chain analysisthe token may quickly become overpriced compared to overall market conditions.
Ripple token faces huge risks
About a month ago, XRP price breaks through $1 mark First time in a long time. Some market watchers believe this was a false breakout. However, this sentiment was proven wrong as it is now trading at $2.36.
Although there are several predict As the token’s value could rise towards the $5 mark, some on-chain indicators suggest this could be challenging. One metric that aligns with this article is the Network Value to Transactions (NVT) ratio.
The NVT ratio measures the growth of an asset’s market value relative to trading growth. When this ratio decreases, it means that transactions on the network are growing faster than the market cap, which is bullish and indicates that the price is undervalued.
On the other hand, a surge in the NVT ratio indicates that the market capitalization is growing at a faster rate, which is pulling it towards higher levels. overrated area. According to data from Santiment (shown in the chart above), XRP’s NVT ratio has jumped to a high of 477.
Another indicator with this sentiment is price divergence from Daily Active Addresses (DAA). Price DAA measures the level of price growth compared to user engagement. When this indicator increases, it means user engagement is supporting price action, which is bullish.
However, as of the time of writing, the price of DAA Divergence has fallen by 326.13%, indicating the volume of DAA Divergence Ripple wallet Interaction with tokens is reduced. If this trend continues, then XRP price may drop below $2.
XRP Price Prediction: Momentum Remains Bearish
On the 4-hour chart, XRP price try to $2.40. However, the altcoin encountered resistance at $2.35, pulling the price back to $2.31. Moving Average Convergence Divergence (MACD) shows that the 12-period and 26-period exponential moving averages have fallen into negative territory.
This drop indicates the bearish momentum surrounding the coin. If the momentum continues to decline, then XRP price could drop to $2.05.
So, is XRP overvalued? This analysis suggests that may be the case. in a Strong bearish scenariothe coin may drop to $1.90. in turn, Increased buying pressure It could push XRP to $2.73.
Disclaimer
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