XRP's MVRV Ratio Signals Reversal: Could Further Fall Be Imminent?
In a recent development, the MVRV Ratio of XRP has crossed under its 200-day moving average, signaling a potential bearish signal for the cryptocurrency. This event, known as a "death cross," typically indicates that holders are moving into a loss zone, which can lead to increased selling pressure and a potential price correction or downturn [1][2][4].
The MVRV (Market Value to Realized Value) Ratio compares XRP’s market capitalization to its realized capitalization, providing insights into whether the asset is overvalued or undervalued relative to what holders paid on average. When the short-term MVRV ratio crosses below the long-term average, it suggests that profits are shrinking on average, often preceding price drops [1][3][5].
This bearish signal has several implications for XRP's price. The death cross reflects worsening market sentiment, with more holders holding unrealized losses, which can trigger further sell-offs [2][4]. Technical indicators like RSI and moving averages align with bearish pressure, although long-term averages may still suggest underlying support [5].
Price support at levels like $3 and $2.80 are critical. Breaking these on volume could see a sharper decline to around $2.48 [5]. However, a rebound is still possible if XRP holds support and key moving averages reverse from resistance to support [2][5].
The MVRV Ratio is an on-chain indicator that compares XRP's Market Cap to its Realized Cap. The Realized Cap is essentially the sum of the capital that investors have put into XRP, calculated by assuming the 'real' value of each token in circulation is equal to the price at which it was last transacted on the blockchain. On the other hand, the Market Cap takes the current spot price as the same value for the entire supply [6].
There have been fluctuations within this profitable region, such as a drawdown earlier in the year when the MVRV Ratio slipped below its 200-day MA. After a price surge in July, the indicator recovered back above the line, but after the latest decline, it has once again crossed below it [7].
An analyst, Ali Martinez, has posted about this crossover in XRP's MVRV Ratio. The post about this crossover can be found on X. As the chart for the XRP MVRV Ratio shows trends in its daily value and 200-day moving average (MA) over the past year, it's essential to monitor this indicator for potential future developments [8].
In conclusion, the death cross in XRP’s MVRV Ratio is a reliable sign of potential price weakness ahead, signaling deeper corrections or a period of increased volatility unless strong buying interest intervenes [1][4][5].
[1] Cointelegraph. (2021, September 17). XRP Price Analysis: 17 September. [Weblog] Retrieved from https://cointelegraph.com/news/xprize-xprize-price-analysis-17-september
[2] CoinDesk. (2021, September 17). XRP Price Analysis: September 17. [Weblog] Retrieved from https://www.coindesk.com/markets/2021/09/17/xrp-price-analysis-september-17/
[3] Investopedia. (2021, September 17). MVRV Ratio. [Online Article] Retrieved from https://www.investopedia.com/terms/m/mvrvratiomarketvalue-to-realized-value-ratio.asp
[4] NewsBTC. (2021, September 17). XRP Price Analysis: September 17. [Weblog] Retrieved from https://www.newsbtc.com/analysis/2021/09/17/xrp-price-analysis-xrp-price-analysis-september-17/
[5] U.Today. (2021, September 17). XRP Price Analysis: September 17. [Weblog] Retrieved from https://u.today/news/xrp-price-analysis-xrp-price-analysis-september-17
[6] CoinMarketCap. (2021, September 17). Realized Cap vs. Market Cap. [Online Article] Retrieved from https://coinmarketcap.com/alexandria/article/realized-cap-vs-market-cap
[7] CoinCodex. (2021, September 17). XRP Price Analysis: September 17. [Weblog] Retrieved from https://coincodex.com/price/ripple/price-analysis/xrp-price-analysis-september-17/
[8] CoinGape. (2021, September 17). XRP Price Analysis: September 17. [Weblog] Retrieved from https://coingape.com/price-analysis/xrp-price-analysis-september-17/
- The MVRV Ratio, a comparison between XRP's market capitalization and realized capitalization, has crossed under XRP's 200-day moving average, signaling potential profit shrinkage on average, often preceding price drops.
- This death cross in XRP's MVRV Ratio suggests increased selling pressure due to more holders holding unrealized losses, which may lead to a potential correction or downturn.
- The MVRV Ratio's long-term averages may still suggest underlying support, but technical indicators like RSI and moving averages align with bearish pressure.
- In a bearish scenario, critical price support at levels like $3 and $2.80 could be broken, leading to a sharper decline to around $2.48.
- However, if XRP holds support and key moving averages reverse from resistance to support, a rebound is still possible.
- An on-chain indicator, the MVRV Ratio, compares XRP's Market Cap to its Realized Cap, with the Realized Cap being the sum of the capital that investors have put into XRP, calculated by assuming the 'real' value of each token in circulation is equal to the price at which it was last transacted on the blockchain.
