XRP reached a new all-time high of $3.41 on January 16. However, it has remained rangebound since then, facing resistance at $3.27 and finding support at $2.94.
While this sideways movement indicates a relative balance between buying and selling pressures, on-chain data suggests that a downside breakout may be on the horizon in the coming weeks.
Surge in Profit-Taking May Threaten New Gains
XRP experienced a dramatic 500% surge in November 2024, fueled by Bitcoin’s rally and Donald Trump’s 2024 presidential election win. Following this, the token witnessed a minor correction, settling between $2.6 and $2.0 before bouncing back.
By January 16, XRP broke through the $3 resistance and reached a new all-time high of $3.41. Since then, the altcoin has traded within a price range, suggesting that neither the buyers nor sellers have full dominance. However, BeInCrypto’s assessment of XRP’s on-chain performance hints at growing bearish pressure, which may result in a price dip in the coming weeks.
For example, XRP’s Market Value to Realized Value (MVRV) ratios assessed over multiple moving averages suggest that the altcoin is overvalued, which could prompt holders to sell for profit. According to Santiment, as of this writing, the token’s seven-day and 30-day MVRV ratios are 1.50% and 14.17%, respectively.
An asset’s MVRV ratio identifies whether it is overvalued or undervalued by measuring the relationship between its market value and its realized value. When the ratio is negative, the asset’s market value is lower than its realized value. This suggests that the market is undervaluing the cryptocurrency compared to what people originally paid for it.
On the other hand, as with XRP, when the ratio is positive, its market value is higher than the realized value, suggesting it is overvalued. This metric suggests that XRP’s current price of $3.10 is higher than the acquisition basis for many of its holders. This may prompt them to sell their holdings for profit, putting downward pressure on the token’s price.
Further, the actions of XRP whales may contribute to this downward pressure. Per Santiment, XRP whale addresses that hold between 10 million and 100 million tokens have reduced their holdings by 1% since it reached an all-time high. Over the past month, this group of large investors has sold 60 million XRP valued above $180 million.
When whales reduce their holdings like this, it puts downward pressure on the asset’s price, especially if the market struggles to absorb the selling volume. If this trend continues, XRP will experience a decline in the next few weeks.
XRP Price Prediction: Will It Push Higher or Drop to $2.13?
A breakdown below the horizontal channel due to a spike in profit-taking activity will XRP’s price away from its all-time high. In this case, its price could drop below $3 and trend toward $2.13.
However, if profit-taking stalls and XRP holders resume accumulation, this could push the token’s price past the resistance formed at $3.27 toward its all-time high of $3.41. If demand is strong enough, it may even break above this price peak to record a new high.
Disclaimer
In line with the Trust Project guidelines, this price analysis article is for informational purposes only and should not be considered financial or investment advice. BeInCrypto is committed to accurate, unbiased reporting, but market conditions are subject to change without notice. Always conduct your own research and consult with a professional before making any financial decisions. Please note that our Terms and Conditions, Privacy Policy, and Disclaimers have been updated.
