According to an analysis of on-chain data by NewsBTC, the price of XRP, Ripple’s native token, appears to be teetering on the edge of a short-term decline. While bulls may want to hold their horses, the report paints a picture of a market that may succumb to selling pressure in the near future.
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Whales Lose Weight: A Bearish Signal?
The report raises a red flag with the movement of XRP into major wallets. Investors are caught between 100,000 and 1 million XRP have noticeably reduced their holdings. This signals a potential increase in selling pressure as these “whales” market their tokens.
The combined assets of this group now represent a smaller percentage of the total circulating supply, which could lead to a temporary glut of XRP and a corresponding price drop.
The behavior of these large XRP holders could indicate a shift in market sentiment, raising concerns about the future stability of XRP prices. As these whales liquidate their positions, the market may experience increased volatility, with prices reacting sharply to the influx of sell orders.
Furthermore, the reduction in whale ownership could indicate a lack of confidence in XRP’s short-term prospects, potentially deterring smaller investors from maintaining or increasing their positions.
The price of XRP managed to shift from $0.48 to $0.52 in just a few days last week. However, the token has wiped out some of these gains. The price of the token may drop below $0.50 due to the decrease in balances. The effect was already active because the value of the token at the time of publication was $0.51.
OI and active addresses: no bullish light
The enthusiasm for XRP is further dampened by the Open Interest (OI) metric. OI refers to the total value of all open positions in XRP futures contracts. A drop in OI, as observed recently, means a drop in market activity and possibly more sellers closing their positions.
This trend is consistent with the decreasing number of active addresses on the XRP network. Active addresses represent the unique number of wallets involved in XRP transfers within a specific time frame. A recent decline in the number of active addresses indicates a decline in overall market participation, which can often precede a price drop.
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Volatility: a double-edged sword
One bright spot some may see is the recent spike in growth The one-day volatility of XRP. However, volatility can be a double-edged sword. While this may indicate increased market activity and possibly lead to price increases, the current situation appears to be trending towards the opposite.
The increase in volatility, combined with selling pressure and declining participation, could reinforce a downtrend rather than cause a price increase.
Featured image from CoinCodex, chart from TradingView