XRP's recent rise has invigorated the market, but the truth may not be as optimistic as it seems. Although breakthrough signals appear to have emerged, XRP's valuation is edging towards being overvalued, and this seemingly strong breakout may just be a fleeting short-term phenomenon.
NVT ratio soars: This week, XRP's network value to transaction volume ratio (NVT) surged to a five-year high, indicating that the market value far exceeds actual trading volume, and the market is overheated! Historical experience shows that this phenomenon typically indicates that a price correction is imminent.
Abnormal capital flow: Although the Chaikin Money Flow (CMF) indicator has surged, there is no corresponding buying power to support the price increase. A lot of speculation and hype have driven the price up instead of genuine investor interest.
Overvaluation: XRP's current valuation may indicate a bubble in the short term, and the market may face a correction after experiencing this hype. As the market cools down, this false upward momentum is likely to gradually dissipate, and XRP's price may very well fall below current levels.
Unsustainable short-term rebound: Although XRP has risen 22% in the past two weeks, it still faces significant risks of being overvalued. Investors should be wary; once the hype dissipates, this wave of increase may be hard to maintain.
Strategy Tip: There may still be fluctuations in the short term, but if there is no real market foundation to support it, XRP may face a price correction. Overvalued altcoins always come with greater pullback risks, so caution is needed when choosing to enter the market!
