XRP price drops 5% in a week, trading at $0.55 due to increased profit-taking.
MVRV ratio at 48% indicates overvaluation, prompting holders to sell.
Technical indicators suggest a potential drop to $0.52 or recovery to $0.60, depending on demand.
Ripple (XRP) has experienced a notable decline over the past week amidst mixed market conditions. This price action comes as a direct result of XRP holders capitalizing on the profitability of recent daily transactions, contributing to a sustained sell-off.
The Market Value to Realized Value (MVRV) ratio, a key metric for assessing an asset’s valuation, currently stands at 48% for XRP. This elevated figure suggests that the token is trading well above its average acquisition cost, a situation that often prompts holders to liquidate their positions for profit.
The MVRV ratio’s current reading indicates that a substantial portion of XRP holders are in the green, fueling the ongoing wave of token distribution.
XRP traders cashing out
Complementing the MVRV data, XRP’s Network Realized Profit/Loss (NPL) metric has consistently registered positive values since the beginning of the month. This trend confirms that the majority of XRP traders are closing their positions at a profit, further exacerbating the selling pressure on the token.
Source: Santiment
The NPL’s positive readings serve as a clear indicator of the market’s profit-taking sentiment, which typically creates downward pressure on an asset’s price.
The exodus of liquidity from the XRP market is further evidenced by the negative Chaikin Money Flow (CMF) indicator. Since August 11, the CMF has remained below the zero line, signaling ongoing market weakness.
When coupled with a declining price, a negative CMF often portends an extended downturn, raising concerns about XRP’s near-term price trajectory.
Looking ahead, the coin’s price action will likely be dictated by the interplay between ongoing profit-taking and potential new demand. In the absence of a major influx of buyers to counterbalance the current selling pressure, XRP could see its price retreat to the $0.52 level.
