About a month ago, the price of XRP surpassed $1 for the first time in a long time. While some thought it was a false move, this assumption turned out to be wrong, as the altcoin is currently worth $2.36.
Despite predictions that the asset’s price could reach $5, some on-chain indicators point to possible difficulties. One such indicator is NVT.
The NVT ratio shows the growth of an asset’s market cap relative to the growth of the number of transactions. When this ratio falls, it means that transactions on the network are growing faster than the market cap. This is a bullish signal, indicating undervaluation.
A rising NVT ratio shows that the market cap is increasing faster than the number of transactions. This leads to the asset becoming overvalued. According to Santiment, the NVT ratio for XRP has reached 477.
The divergence between the price and the daily active addresses (DAA) also hints that XRP may be overheated. This indicator shows how the price is rising relative to the market participation. At the time of writing, it is down to 326.13%, suggesting that the number of wallets interacting with the token has decreased. #2024withBinance
