Ripple's XRP was on a downward trajectory, losing nearly 10% in the past two weeks.
The decline of the coin since August 14 has caused a split in investor behavior, with on-chain data indicating divergent strategies among different coin holder groups. What does this mean for XRP holders?
Can buyers on the dip outpace the distribution of long-term holders?
Short- and mid-term coin holders seem to see the dip as an opportunity for accumulation. On-chain analysis indicates that these newcomers to the market have increased their supplies during the decline over the past two weeks, betting on a near-term recovery.
According to data from Glassnode, the HODL waves of XRP, a metric that tracks the duration of coin holding, reveal that two groups of investors have become more active.
Those who have held their coins for between one and three months (short-term holders) currently control 9.51% of the circulating supply of the coin. This group has increased its collective holdings by 8% since August 14, reflecting their conviction in a potential recovery.
Mid-term investors have also joined the 'buy the dip'. According to Glassnode, the 6-12 month group now controls 23.19% of the circulating supply of XRP, its highest share since the beginning of the year. This shows further renewed accumulation as XPR trades at a low price.
However, the optimism of these buyers contrasts with the behavior of long-term holders (LTHs). This is illustrated by the vitality of XRP, which has steadily increased since August 19.
The asset's vitality tracks the movement of its long-held/inactive coins. This is done by measuring the ratio of destroyed coin days to total accumulated coin days. When the metric rises, it means that long-term holders are moving or selling their coins.
When it declines, it means that long-term holders are moving their assets off exchanges, a step considered a bullish signal for accumulation.
On the other hand, when it rises, long-term coin holders are moving or selling their coins, a trend that is now putting additional selling pressure on XRP.
XRP struggles to determine its direction
The divergence in the behaviors of these groups of investors shows the uncertainty surrounding XRP's near-term trajectory. Its recovery depends on whether new demand from new buyers can outweigh the selling pressure from seasoned investors.
In this case, it could bounce back, regain the $3 mark, and head towards $3.22.
However, if selling increases, the price of XRP could extend its decline and drop to $2.63.