Long-term $XRP holders realized an unprecedented $1.5 billion in profits last week as the cryptocurrency, focused on payments, soared to its highest level in three years. This marks the largest profit realization since April 2021, according to data reports. Such profit-taking is typical investor behavior following significant price rallies and does not inherently suggest a shift in long-term market sentiment for the token.
The Market Value to Realized Value (MVRV) ratio, a key on-chain metric, climbed to an impressive 217% as of Tuesday, per FXStreet, citing Santiment data. This surge indicates that XRP’s current market valuation substantially exceeds its average purchase price, signaling potential short-term overvaluation. Historically, such a scenario often triggers corrective price movements.
The MVRV metric calculates the ratio of a token’s market capitalization to its realized capitalization, essentially reflecting the aggregate cost basis of all coins in circulation. Elevated MVRV levels, coupled with high profit-taking, suggest a market primed for a potential correction in the near term.
Several catalysts have contributed to XRP’s recent price surge. The token reached a local peak of $1.60 last week before retracting to lows of $1.30. Despite this, XRP remains up by 31% over the past week and has more than doubled in value over a two-week period. Contributing factors include:
1. Regulatory Developments: Ripple Labs cleared significant regulatory hurdles, boosting market confidence in XRP.
2. XRP Ledger Developments: The launch of money market funds on the XRP Ledger added utility and investor interest.
3. Technical Analysis: Bullish price patterns further fueled momentum.
Additionally, Ripple Labs announced plans to invest an undisclosed amount in the newly rebranded Bitwise Physical XRP ETP. Formerly known as the ETC Group Physical XRP, this exchange-traded product (ETP) has now been listed under the ticker GXRP on Germany’s Deutsche Börse XETRA. The announcement propelled XRP’s value by 10%.
Brad Garlinghouse, CEO of Ripple Labs, highlighted in a press release the burgeoning global demand for crypto-backed investment products. "With the U.S. regulatory framework for crypto becoming clearer, the trend of increased interest in crypto ETPs is set to accelerate, further driving demand for offerings like the Bitwise Physical XRP ETP," he stated.
Launched by Bitwise in 2022, this 100% physically backed ETP provides European investors with a streamlined means of gaining exposure to XRP, aligning with the growing institutional interest in cryptocurrency investment vehicles.