Although there has been speculation of a correction in XRP’s price since its explosive rally in November, this has yet to happen. However, according to on-chain data, $XRP may be overvalued compared to current market conditions.
About a month ago, the price of XRP surpassed $1 after a long period of stagnation. While some analysts expect the price of#XRPto reach $5, on-chain data shows that this goal may be achieved. One indicator that aligns with this thesis is the ratio of network value to transaction rate (NVT).
The NVT ratio measures the ratio of an asset’s market value to its transaction growth. When the ratio is low, it means that transactions on the network are growing faster than its market value. This typically indicates that the asset’s price is undervalued and has potential to rise.
However, an increasing NVT ratio indicates that the market cap is growing faster and the asset is entering an overvalued zone. According to Santiment data, XRP’s NVT ratio is currently at 477, indicating a high value.
Another similar indicator is the DAA-Price Divergence. The DAA-Price Divergence compares the level of user engagement with the price increase. When the indicator increases, it indicates that user engagement is supporting the price movement, which is a positive sign.
However, the DAA variance is currently down 326.13 percent, indicating that the number of wallets interacting with XRP is declining. As long as this data holds, the price of XRP could drop below $2.
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