The Network Value to Transaction (NVT) ratio for XRP has reached a five-year high, a level not seen since January 2020. This metric compares the market capitalization of the cryptocurrency with the transaction volume conducted on its network.
A high NVT ratio indicates that while investors are optimistic, their optimism is not translating into real network growth or usage. This imbalance typically signals an overheated market, which often corrects as the excitement wanes.
The current NVT ratio indicates that the value of XRP exceeds its transaction activity, which is a bearish signal. As the market cools, this imbalance could lead to a price correction, further hindering XRP's efforts to break through key resistance levels.
XRP's macro momentum also shows signs of pressure. Current network growth is at a four-month low, reflecting a decline in the rate of new address creation.
This is an important metric for assessing the appeal of a cryptocurrency in the market, as an increasing number of active addresses typically indicates rising adoption.
In the case of XRP, the lack of new address creation indicates that this altcoin is struggling to attract new investors. The lack of incentives for new investors to join the network further dampens XRP's prospects.
XRP Price Struggles to Experience Breakout
XRP is currently trading at $2.40, just below the resistance of $2.56. This level has proven to be a strong barrier, with XRP failing to break through it twice this month.
As a result, this altcoin is likely to continue consolidating between the range of $2.27 and $2.56. This consolidation period may continue if market conditions remain unchanged.
If bearish conditions worsen, XRP could drop below support at $2.27. In this case, the price could fall to $2.14 or lower, wiping out much of the recent recovery from the $2.00 level.
The continuation of this downward movement will strengthen the bearish outlook.
However, if XRP can break through the resistance of $2.56 and turn it into support, the bearish thesis will be invalidated. A successful breakout could push XRP towards $2.95 and, ultimately, reach $3.00.
It will require strong support from investors and a more favorable market environment to maintain upward momentum.