- Circulation climbed, increasing the chances of selling pressure.
- XRP’s MVRV ratio reflected the poor demand for the token.
AMBCrypto’s on-chain analysis of Ripple’s [XRP] network showed that the number of tokens in circulation has been increasing.
As of this writing, XRP’s one-day circulation was 1.16 billion. The increase in circulation implies that a high number of XRP have been engaged in transactions.
For the price action, this might not be good news. In most cases, low circulation means that there is less likelihood to sell.
However, the high circulation XRP experienced suggests that traders might be involved in selling the token especially as it brought in some gains recently.
Source: Santiment
Poor demand for XRP
At press time, the Ripple native token changed hands at $0.59. If circulation continues to increase, XRP might slide below this level and hit $0.55.
However, circulation was not the only metric impacted on Ripple’s network. According to on-chain data obtained from Santiment, active addresses have also been affected.
At the time of writing, the 24-hour active addresses had dropped to 29.800. On the 29th of February, this same metric was over 35,000.
Active addresses serve as a good indicator of daily users of a blockchain. If it increases, it means that many distinct addresses are participating in transfers.
Therefore, the decrease here, suggests that the bucket of transfers by unique addresses had reduced. In terms of the market sentiment, the decline implies that traders were not bullish on XRP. Instead, they seem to be looking elsewhere.
Furthermore, AMBCrypto looked at the Market Value to Realized Value (MVRV) ratio. This on-chain indicator reveals if an asset is trading below its fair value, at its fair value, or above it. At press time, XRP’s one-day MVRV ratio was 1.10%.
This reading implies that the price has fallen below the aggregate cost basis. Therefore, many investors were holding unrealized losses.
Typically, this is supposed to provide a strong signal of undervaluation and propel accumulation. But XRP has unimpressive demand dynamics. Therefore, this might not be the case.
Source: Santiment
No way out yet
At press time, the Relative Strength Index (RSI) was 57.65, implying that bulls were attempting to push XRP’s price up. However, in the bid to drive a higher value, XRP could face a hurdle at $0.61.
If bulls successfully breach the resistance, XRP’s price might climb to $0.65. Conversely, failure to break through $0.61 could drive a decrease below $0.57.
Source: TradingView
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In addition to the RSI, AMBCrypto evaluated the Money Flow Index (MFI).
As of this writing, the MFI reading had increased, suggesting a surge in capital flow. If the flow continues to increase, the price might jump. But in the instance where liquidity decreases, XRP’s value might shrink.
