Why XRP’s $19 Billion Gain Might Be Driven By Speculative Trades

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In just a week, the worth of Ripple‘s XRP has significantly surged, boosting its market capitalization by an impressive $19 billion. Now, it is being traded at approximately $2.37, marking a 16% increase in value over the last seven days.

Nevertheless, an analysis of BeInCrypto’s on-chain information suggests that the recent surge in XRP’s price might be largely fueled by speculative trading. Over the review period, there has been a significant decrease in demand for XRP, indicating that it is likely to reverse its current rising trend.

Ripple’s Declining New Addresses Highlight Lack of Fresh Demand

Over the last week, Santiment reports a significant decrease of 32% in the number of new trading addresses for XRP being created each day. Remarkably, the value of the token has risen substantially by more than ten percent within this time frame.

If a commodity’s cost goes up while the creation of new user accounts associated with it decreases, this implies that the price hike is primarily due to speculators rather than new users joining the market. This suggests a shortage of genuine demand for the asset, indicating a speculative surge that might not persist over time.

Additionally, the decline in XRP’s Network Realized Profit/Loss adds credence to a bearish perspective. According to Santiment, since it peaked at $1 billion on January 1st, this metric has dropped by an astounding 99%. Currently, it stands at approximately $10.48 million.

The Network Realized Profit/Loss of a coin signifies the gap between the last transaction price and the present market price. This figure represents the actual profits or losses accumulated by users on the network.

During a price increase, if the selling doesn’t occur extensively, it could indicate a speculative or thinly traded market. Holders might be holding on due to anticipation of further price growth or reluctance to cash in their profits. This trend implies that the market participation isn’t robust enough to support the price surge. Essentially, this means that the price rise may not be long-lasting as it lacks substantial demand for the asset.

XRP Price Prediction: Can It Maintain Its Gains Amid Low Demand?

Currently, each XRP is being traded for approximately $2.37. Over the last seven days, the token has experienced a significant surge of around 16%, causing its price to surpass the upper boundary of a downward sloping parallel channel.

Even if XRP’s current gains are maintained due to low demand, there’s a possibility that it might revert its direction. If this happens, the price could fall back within its range and approach the support level of around $1.88.

Instead, if there’s an increase in purchasing activities, it would contradict the current bearish perspective. Under such conditions, XRP’s price might continue to rise and potentially reach its previous high of around $2.90 again.

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2025-01-06 15:38