XRP’s NVT ratio signals overvaluation
The Network Value to Transaction (NVT) ratio for XRP highlights a potential risk of overvaluation despite its recent rally. The metric compares the asset’s market capitalization to its transaction volume, offering insights into whether its price is sustainable.
Source: Cryptoquant
XRP’s NVT ratio has fluctuated sharply in December, indicating instability. The current spike in the ratio reflects a disconnect between XRP’s price and the underlying transaction activity on the network.
While the price sits at $2.23, the high NVT ratio signals that market cap growth is outpacing network utility, a bearish sign. Unless transaction volumes catch up, XRP may face heightened correction risks, challenging the bullish momentum observed in recent weeks.
XRP: Reduced network activity?
The Price-Daily Active Addresses (DAA) divergence reveals a concerning trend for XRP’s rally. This metric assesses whether price movements align with user engagement on the network.
While XRP’s price surged to $2.23, the DAA divergence has plummeted by 326.13%. This stark decline indicates a drop in the number of active XRP wallets interacting with the token.
Source: Santiment
Such a sharp divergence suggests that the recent price spike is not being supported by robust on-chain activity.
If user engagement remains low, it could undermine XRP’s bullish momentum and increase the risk of a significant price correction, putting its current rally under pressure.
Read XRP’s Price Prediction 2024–2025
Bearish momentum persists
On the 4-hour chart, XRP remains under bearish pressure. The price attempted to reach $2.40 but faced resistance at $2.35, causing a pullback to $2.31. The MACD indicator shows that the 12- and 26-period EMAs are in the negative region, reinforcing bearish sentiment.
Source: TradingView
With declining momentum, XRP risks further drops to $2.05 and potentially $1.90 in a strongly bearish scenario. However, renewed buying interest could push the price back to $2.73.
As the token consolidates around $2.24, traders should watch for either a breakout above $2.35 or a continued downtrend.
The MACD’s position highlights caution for bullish expectations in the short term.
