Ripple (XRP) price attracted significant market euphoria as it climbed to a new 2023 peak of $0.56 on Tuesday. However, the circumstances surrounding the recent Fed Rate announcement effectively halted the XRP price rally. How long will the bearish XRP price trend last?
Ripple (XRP) team has all but positioned the XRP Ledger as the go-to blockchain solution platform for governments and institutional players. Inadvertently, this has made the XRP price highly sensitive to the whims and influences of whale investors.
On Wednesday, June 14, institutional investors kicked in after the US Fed announced a rate pause with the caveat of likely hikes in the future. Relative to other Layer-1 altcoins, XRP was disproportionately impacted as the price crashed 18% by the close of Thursday.
Will the XRP ledger network attract new demand to overturn the bearish outlook quickly?
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XRP Whales Are Dumping Their Coins
Institutional investors are dumping their XRP bags partly due to the recent Fed announcement. On-chain data shows the XRP whale cohort holding 100 million to 1 billion coins began selling on June 11. But the bearish frenzy has been further exacerbated after the June 14 announcement.
The chart below shows that between June 11 and June 16, the whales have withdrawn 300,000 million coins.
At the current market price of $0.46, the whales have sold off coins worth approximately $138 million. The whales played a central role in the current price downswing by offloading such a significant volume of coins within a week.
Unless the trend reverses, this could scare away potential investors and cause existing investors to become bearish. These could cause the XRP bearish price trend to linger.
XRP Network Value is Declining
According to on-chain data, XRP network value has deteriorated over the past week. This suggests that the recent price rally was powered by market speculation rather than the network’s underlying economic activity.
Santiment’s Network Value to Transaction Volume (NVT) ratio assesses the growth of a cryptocurrency’s market value relative to the underlying transactional activity.
Between June 12 and June 16, the NVT ratio has risen 35% from 64.49 to 87.39.
In simple terms, the rising NVT ratio, as seen above, indicates that the asset price is growing faster than the underlying economic activity. This typically happens during periods of heightened market speculation.
The current XRP rally had sharply responded to investors reacting to the SEC’s recent crackdown on major exchanges while labeling rival Layer-1 altcoins as securities.
The NVT ratio will likely keep rising if XRP cannot attract higher demand in the form of concrete user acquisition and growth in transactional activity.
In conclusion, strategic investors will monitor the bearish whales and transaction activity growth to predict XRP price actions in the coming days.
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XRP Price Prediction: A Bearish Downsing Toward $0.40
If transactional activity falters and bearish whale investors continue to sell, the XRP price will likely fall under $0.40 again.
With prices currently sitting at $0.46, most crypto investors that bought XRP within the past month will make 8% losses if they sold today.
The historical Market Value to Reallized Value chart below shows that they will likely keep selling until their losses approach 10%, around $0.42.
But if the bearish on-chain trends identified above do not abate, the XRP price could drop further below $0.40
Conversely, the bulls could overturn the pessimistic stance if the XRP price rises above $0.50. However, many investors will likely sell at $0.49 to erase their losses at the break-even point.
Otherwise, XRP could regain its 2023 peak at $0.55.
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