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XRP recorded a significant 35% surge in value last week, trading at $3.10, heightening concerns about its current market overvaluation.
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On-chain indicators reveal a market value to realized value (MVRV) ratio of 409.47%, suggesting substantial profit margins that may trigger sell-offs.
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A negative Balance of Power (-0.83) points to increased selling pressure, potentially pushing XRP’s price down towards the $2.45 support level.
Experts warn of potential sell-offs as XRP’s MVRV ratio indicates overvaluation, with current support levels possibly leading to further price declines.
XRP’s Overvalued Status Could Trigger More Selloffs
XRP’s recent surge has prompted scrutiny over its market valuation. With the MVRV ratio currently at 409.47%, on-chain data indicates that the asset may be significantly overvalued.
The MVRV ratio is a crucial metric for traders, representing the difference between market value and realized value—specifically, the average price at which tokens were purchased. When the MVRV exceeds 100%, it signifies the potential for profit-taking, as sellers might capitalize on their increased asset value. This factor underlines why XRP, despite its upward price movement, faces mounting pressures that could lead to downward corrections.
XRP MVRV Ratio. Source: Santiment
The observed negative Balance of Power (BoP) at -0.83 further corroborates this narrative, as it measures the influence of buying versus selling momentum. A negative BoP indicates that many investors are opting to offload their holdings rather than accumulate more, reinforcing the bearish outlook for XRP in the near term.
XRP Balance of Power. Source: TradingView
XRP Price Prediction: Selling Momentum Threatens to Push Price Lower
As the selling pressure intensifies, XRP’s price is predicted to drift further from its previous all-time high. Utilizing the Fibonacci Retracement tool, analysts suggest the altcoin may find support at $2.45.
XRP Price Analysis. Source: TradingView
Alternatively, if market sentiment shifts towards accumulation, the bearish outlook could be reconsidered, allowing XRP the opportunity to rally back toward its all-time high and potentially exceed it.
Conclusion
In summary, while XRP currently enjoys heightened market attention due to its recent gains, analytical indicators suggest significant selling pressure stemming from its overvaluation. The key support level at $2.45 looms as a potential target for the asset if profit-taking prevails. Investors should remain vigilant and responsive to market changes as they assess XRP’s performance in the near future.
