XRP 25% Weekly Rally: Why a Local Top Could Be Near

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As a seasoned researcher with years of experience analyzing the cryptocurrency market, I’ve seen my fair share of bull runs and bear markets. The recent surge in Ripple’s XRP price has caught my attention, but it’s also triggered my caution alarm.

Over the past week, Ripple‘s XRP has seen a substantial increase of approximately 25%, peaking at $2.72. Nevertheless, current trends suggest that this surge in XRP price might be nearing its local peak as a result of shifts observed in various indicators.

For the future of this altcoin, optimism remains high, but it’s crucial to approach near-term profits with caution due to these reasons.

The Ripple Token Becomes Overvalued, Buying Pressure Tanks

One sign that XRP’s upward trend might slow down is the Network Value to Transactions (NVT) ratio. This ratio helps determine if a cryptocurrency’s market value is increasing at a faster rate than its transaction activity. By analyzing this ratio, we can gauge whether a coin is potentially overvalued or undervalued, making it an essential tool for evaluation purposes.

If the rate at which transaction volume on the blockchain surpasses the expansion of its market capitalization, it indicates that the cryptocurrency may be underpriced, suggesting a potential price hike may occur soon.

In the context of XRP, the NVT (Network Value to Transactions) ratio has significantly increased from 30.68 to 71.65 over the past three days. This substantial rise suggests that the market capitalization of this cryptocurrency is expanding more rapidly than the number of transactions on its network. As a result, it’s possible that the recent surge in XRP price may soon level off, and the altcoin might be approaching a local peak.

Additionally, the Money Flow Index (MFI), as depicted on the daily graph, appears to lend credence to this argument. This technical indicator evaluates buying and selling pressure by considering both price and trading volume.

Using this information, the indicator has the ability to identify whether a cryptocurrency is experiencing overbuying or underselling. Specifically, if the reading surpasses 80.00, it indicates overbuying. Conversely, when the reading falls below 20.00, it suggests that the cryptocurrency is being undersold.

As a crypto investor, I noticed on December 3, the Money Flow Index (MFI) for XRP/USD daily chart hit 83.20, suggesting that the altcoin had become overbought. Since then, the MFI has dropped, signaling reduced buying pressure compared to a few days ago. If this trend persists, it might prove challenging for XRP’s price to surge any higher.

XRP Price Prediction: Sub-$2 Levels Coming

An analysis of the day-to-day graph indicates that the decline of XRP from $2.72 allowed it to establish a support level at $2.25. Nevertheless, the figure below hints at reduced trading activity surrounding XRP, which implies that an immediate surge in XRP prices may not occur over the short term.

Instead of attempting to drive the price upwards past the resistance point that bears are trying to maintain, bears could potentially force the price of XRP even lower. If this occurs, the value of XRP might drop to approximately $1.85, which is where the 23.6% Fibonacci ratio lies.

If the demand to sell the token increases significantly, it may drop towards approximately $1.40, which is the 38.2% Fibonacci retracement level. But if the interest to buy grows stronger and the MFI (Moving Average Convergence Divergence) indicator recovers, XRP could potentially rise above $2.90 and reach its annual high of $3.20 this year.

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2024-12-07 15:53