The post XRP Faces Potential Overvaluation Risks Amid Weakening Momentum and Declining Network Activity appeared on BitcoinEthereumNews.com.

XRP’s recent price surge is drawing attention, but underlying on-chain metrics suggest caution as overvaluation and declining activity present risks. Despite impressive gains, analyses indicate serious concerns regarding sustainability, urging investors to scrutinize current market dynamics. According to COINOTAG, “The rapid price increase in XRP is at odds with the fundamentals, which may trigger volatility moving forward.” XRP’s recent rally may be overblown; key metrics reveal a potential decline in activity and price sustainability. Explore the latest trends. Delving into XRP’s NVT Ratio: Overvaluation Concerns The Network Value to Transaction (NVT) ratio of XRP has surged significantly, suggesting an overvaluation amidst its price increase. This important metric, which compares the market cap to transaction volume, indicates a divergence that raises alarm bells regarding the sustainability of XRP’s price level. As of mid-December, XRP trades at approximately $2.23, concurrent with a rapidly rising NVT ratio that signals that the market capitalization is increasing faster than network utility. This presents a bearish outlook; should transaction volumes not improve, XRP is at risk of facing a significant correction. Examining User Engagement: XRP’s Active Addresses Decline A concerning divergence is evident when analyzing the Daily Active Addresses (DAA) metric, which indicates how many unique addresses interact with the XRP network. Although XRP’s price is on the rise, the DAA has suffered a significant decline of 326.13%, suggesting weakened user engagement. The significant drop in active addresses raises questions about the enduring nature of XRP’s rally. If user engagement continues to dwindle, it may undermine price stability and provoke sharp downturns in value. Bearish Sentiment: Technical Indicators Indicate Caution The technical analysis of XRP on the four-hour chart reveals continued bearish pressure as attempts to breach the $2.40 level were met with resistance around $2.35. This situation has led to a pullback, with prices returning…

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Filed under: News - @ December 22, 2024 10:11 pm