The rise of Ripple (XRP) is just a "dead cat bounce"
Ripple's XRP token has risen 5% in the last 24 hours, but this is a typical "dead cat bounce" that often happens amid a general market downturn. Despite the short-term rise, traders continue to play down XRP.
Onchain statistics indicate a steady decline in demand and the desire of XRP holders to sell the coin at the first opportunity.
A short-term rally won't help
"Dead cat bounce" refers to a temporary recovery in the price of an asset after a significant drop. On Monday, XRP fell to a 30-day low of $0.43 during the global sell-off.
When the upward correction began, XRP experienced a "rebound," with daily price gains of up to 12% at one point. However, onchain data and the daily price chart point to the possibility of renewed bearish momentum.
BeInCrypto analysts note a negative correlation between price and daily active addresses (DAA). This metric compares changes in an asset's price to changes in the number of its daily active addresses. Investors track it to see if price dynamics are accompanied by corresponding network activity.
At the time of writing, the divergence between the price of Ripple (XRP) and the DAA is -51.65%. A negative value during a price rally indicates that user activity or network engagement is not supporting the rally. This divergence always signals a weak and unsustainable rally.
In addition, the positive XRP market value to realized value (MVRV) ratio of 30.88 confirms the growing selling pressure.
An asset's MVRV ratio measures the ratio of its current price to the average price at which all tokens in circulation were purchased. When the value is above one, the asset is trading above cost for many investors.
With a value of 30.88, the MVRV XRP ratio suggests that the altcoin is significantly overvalued. Its holders may sell it at a profit, especially as bearish sentiment builds. This will put pressure on the price, preventing it from rising in the short term.
XRP price outlook: a drop below $0.50 is inevitable
If the selling pressure intensifies, Ripple (XRP) will lose all the positions it has gained and resume its downtrend. In this case, the price may fall to $0.46.
However, if buying activity resumes and sufficient demand supports the current growth, XRP could rise to $0.52
