XRP's rally faces sustainability concerns as key metrics reveal overvaluation and declining network activity.
has become one of the hottest topics in the altcoin market following its explosive rally in November. As the token’s price continues to surge, questions about its sustainability are mounting. While many had expected a market correction, XRP has yet to experience a significant pullback, leaving investors on edge.
Recent on-chain analysis, however, suggests that XRP might be overvalued when compared to broader market conditions, fueling concerns about its future price trajectory and potential risks for holders.The Network Value to Transaction ratio for XRP highlights a potential risk of overvaluation despite its recent rally. The metric compares the asset’s market capitalization to its transaction volume, offering insights into whether its price is sustainable.
While XRP’s price surged to $2.23, the DAA divergence has plummeted by 326.13%. This stark decline indicates a drop in the number of active XRP wallets interacting with the token.Such a sharp divergence suggests that the recent price spike is not being supported by robust on-chain activity. If user engagement remains low, it could undermine XRP’s bullish momentum and increase the risk of a significant price correction, putting its current rally under pressure.On the 4-hour chart, XRP remains under bearish pressure. The price attempted to reach $2.40 but faced resistance at $2.35, causing a pullback to $2.31. The MACD indicator shows that the 12- and 26-period EMAs are in the negative region, reinforcing bearish sentiment.With declining momentum, XRP risks further drops to $2.
As the token consolidates around $2.24, traders should watch for either a breakout above $2.35 or a continued downtrend.Samantha is a full-time crypto journalist with 2 years of writing experience in the field. Her key area of interest is the political ramifications of crypto-centric laws around the world. An avid market trader, Samantha also has a keen eye for price anomalies on trading charts.Subscribe to get it daily in your inbox.
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