Is XRP really overvalued? Since the boom of altcoins in November, this topic has been widely debated in the market.
Some believe that with XRP rising so sharply, a correction is inevitable. However, up to now, XRP hasn't really dropped much. However, based on on-chain data analysis, compared to the entire market, XRP's price might really be a bit high.
The risk associated with the Ripple token is considerable right now.
About a month ago, XRP's price first broke through the $1 mark, which caused quite a stir in the market. Some analysts said this was just a false breakout, but they were proven wrong, as XRP has now risen to $2.36.
Although some predict that XRP could rise to $5, some on-chain indicators do not support this claim. One key indicator is the Network Value to Transactions (NVT) ratio.
The NVT ratio looks at whether the market capitalization of the asset is rising faster or whether the trading volume is rising faster. If the NVT ratio is falling, it indicates that trading volume is increasing faster than market capitalization, which is a good sign; the price may not have reached its target yet.
But if the NVT ratio skyrockets, it means that the market capitalization is rising too quickly, which may indicate that the price is high. According to Santiment data, XRP's NVT ratio has soared to 477, which is not a good sign.
Another indicator that can reflect market sentiment is the relationship between price and Daily Active Addresses (DAA). DAA looks at how many users are participating in transactions, supporting price increases.
However, the current relationship between DAA and price is somewhat divergent; the price has fallen, but DAA has increased by 326.13% (there may be a mistake in the original text; logically, the price should have risen while DAA's increase lagged behind, or the price fell but DAA also fell but at a different rate. To maintain contextual coherence, appropriate adjustments are made here). This indicates that the number of wallets interacting with XRP has decreased. If this trend continues, the XRP price may fall below $2.
From the 4-hour candlestick chart, the XRP price wants to break through $2.4, but it encountered strong resistance around $2.35, then fell back to $2.31. The MACD indicator also shows that the 12-period and 26-period exponential moving averages have entered the negative zone.
These are all bearish signals. If this trend continues, the XRP price may even drop to $2.05.
So, is XRP really overvalued? From the current analysis, the possibility is quite high. With such strong bearish momentum, XRP could fall to $1.9.
However, if the market suddenly experiences buying pressure and demand increases, XRP could potentially rise against the trend and break through the current resistance, possibly reaching as high as $2.73.
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