- XRP has continued to trade below its levels Exponential 20-day moving average.
- This indicates decreasing purchasing pressure.
Ripple [XRP] could extend its seven-day slide as it closed below the 20-day exponential moving average (EMA) for the fourth straight day on May 31.
When an asset is trading below this important moving average, it is a bearish signal because it suggests that the current price has fallen below the average price of the past twenty days. Traders take this as an indication that the market trend is shifting towards a sell-off.
Demand for XRP is losing steam
AMBCrypto’s review of some of XRP’s key technical indicators confirmed the possibility that the altcoin could lose some of its value in the coming days. For example, the key momentum indicators were below their respective neutral positions at the time of writing.
XRP’s Relative Strength Index (RSI) was 46.64, while the Money Flow Index (MFI) was 40.96.
At these values, these indicators suggest a decline in demand for XRP as market participants preferred to distribute their current holdings rather than purchase new tokens.
Source: XRP/USDT, TradingView
The increase in XRP selling pressure was confirmed by the declining active addresses on the chain.
Per Santiments Data shows that XRP’s daily active addresses, measured using a 30-day moving average, have fallen 30% over the past month.
Similarly, the daily number of new addresses created to trade the altcoin during the same period has also fallen by 29%.
Source: Santiment
In particular, the decline in the active and new addresses of an asset often foreshadows a decline in its price.
Maybe now is the time
Interestingly, despite the drop in demand for the altcoin and its price, daily traders have continued to make profits.
An assessment of XRP’s daily trade volume to profit/loss ratio (based on a 30-day moving average) yielded a value of 1.16.
This suggested that during the period examined, for every trade that ended in a loss, 1.16 trades produced a profit for XRP traders.
Source: Santiment
For traders looking to trade against the market, XRP’s negative market value-to-realized value (MVRV) ratio has provided a buy signal.
According to Santiment data, XRP’s MVRV ratios on the 30-day and 365-day moving averages were -0.7% and -8.5%, respectively, at the time of writing.
This metric tracks the relationship between an asset’s current market price and the average price at which each of its coins or tokens was acquired.
Source: Santiment
Realistic or not, here is the market cap of XRP in terms of BTC
If it is negative, the asset in question is undervalued. It indicates that the current market value of that asset is lower than the average purchase price of all tokens in circulation.
It presents a good buying opportunity because the asset is trading at a discount to its historical cost basis.