The high NVT ratio for XRP indicates a significant price movement is coming.
$XRP's record raises a potential warning for traders and investors. The NVT ratio has surpassed 280.
This jump may indicate that the price of #XRP is rising at a faster rate than its actual usage on the network, which could indicate that the asset is overvalued.
The Net Value to Transactions (NVT) ratio is the market value of a cryptocurrency to the number of daily transactions on its network. A high NVT ratio indicates a decrease in the flow of tokens in the market. This is often interpreted as a sign that hype is exceeding fundamental factors.
On June 19, CryptoQuant data showed a sharp increase in the Net Value to Transactions (NVT) ratio for XRP. Meanwhile, the price of $XRP remained
XRP
2.1371
-1.67%
relatively stable at around $2.167.
For short-term traders, this may mean that a price correction is more likely when trading volume does not increase. Long-term investors may see this as an opportunity to reassess risk exposure.
A high Net Value to Transactions (NVT) ratio is not necessarily a bullish indicator. In some cases, it may simply indicate that the market expects growth or developments that have not yet materialized on-chain.
However, in the absence of significant fundamental reasons, the sudden rise in the Net Value to Transactions (NVT) ratio is a clear sign that network demand is lagging behind price movement.
Decline in the price of Ripple ($XRP)
In recent weeks, interest in Ripple (XRP) has increased due to renewed optimism regarding the potential approval of the Ripple exchange-traded fund (XRP ETF). This may be the right time for traders to pay closer attention to both trading volume and market sentiment, monitoring key price levels.
If the increase in the Net Value to Transactions (NVT) ratio remains without a corresponding increase in network activity, it may exert downward pressure on the price, leading to a decline.
Conversely, if usage begins to catch up, Ripple may stabilize and resume its upward trajectory.
The price of #XRP is currently $2.13, reflecting a slight decrease of 1.44% over the past 24 hours. Trading volume has increased by 37.34% during the same period, reaching $2.59 billion.
Some traders may see the recent decline as a buying opportunity, especially with the potential for price recovery supported by increased trading volume.