According to data from Glassnode, the price surge of XRP above $3 has put nearly 94% of the circulating supply into profit.
As of Sunday, the percentage of XRP supply in profit reached 93.92%, indicating strong investor profits as this cryptocurrency has risen over 500% in the past 9 months, from below $0.40 to $3.13.
Over 90% of the supply being profitable is often a sign of a macro peak for XRP
Such high profit levels in history often signal an overheated market.
At the beginning of 2018, more than 90% of holders were in profit right at the time XRP peaked near $3.30 before the price dropped by up to 95%. A similar scenario also occurred in April 2021, when the profit ratio exceeded 90% just before the 85% drop from the peak near $1.95.
The common profit level indicates that investors are realizing significant gains, but this often increases the risk of distribution as traders look to take profits. A similar scenario may be unfolding right now.
XRP's NUPL is similar to the price peaks of 2017 and 2021
The net unrealized profit/loss (NUPL) index of XRP is signaling a peak risk. This indicator measures the difference between unrealized profits and losses across the network, having entered the 'belief - denial' zone, a phase in history that typically appears right before or during market peaks.
For example, at the end of 2017, the NUPL index of XRP surged to a similar level right at the time when the price of XRP peaked above $3.30. A similar pattern also appeared in April 2021 when NUPL exceeded 0.5, coinciding with the price peak of XRP near $1.95 before entering the next significant drop.
The current trajectory indicates that investors are realizing substantial profits but have not yet entered a fully 'euphoric' state. However, the risk of profit-taking and distribution will increase if NUPL approaches the greedy zone for the first time since 2018.
XRP may absorb potential selling pressure and avoid a deep correction below $3 if it attracts new capital inflows, especially from institutional demand and overall altcoin market momentum.
The classic bearish pattern of XRP warns of a 20% decline risk
The current price of XRP is accumulating in a descending triangle after breaking above $3. This pattern is generally bearish, characterized by lower highs compared to the horizontal support around $3.05. Earlier this month, XRP temporarily broke below support in a fakeout, but then bounced back in this structure.
Pressure from multiple retests of the lower trendline increases the risk of a decisive breakdown. If the price confirms a break below $3.05, it could trigger a sell-off to $2.39 in September, a drop of about 23.5% from the current price.
Conversely, the bulls need to break the descending resistance line to re-establish an upward trend and invalidate the bearish pattern. Many believe that in this scenario, the price of XRP could rise to $6.