These Metrics Are Bright Warning Signs As XRP Approaches A Possible Bear Market Turn
XRP experienced one of its most significant rallies ever in this cycle, reaching an all-time high. However, since the broader cryptocurrency market is highly volatile, altcoin price it is now dangerously low at the $1 mark. Despite the significant decline, on-chain metrics suggest that the altcoin may still be set for a downward move in the coming weeks and months.
XRP Faces Threat of Bear Market
I XRP The bloodshed has continued after falling by almost 20% on Thursday, the price of the altcoin is now set at $1.22. Meanwhile, new data are flashing strong warning signs about a possible continuation of the current downward trend.
An advanced investment and on-chain data analysis platform, Alphractal, has explained a growing collection of on-chain and market metrics, suggesting that XRP may be nearing the edge of an aggressive bear market phase. Liquidity, owner behavior, and derivative stock indices are starting to reorganize in a way that has preceded historically dramatic declines.
Specifically, 3 different key metrics are telling in this approaching bear market phase for the leading altcoin. These metrics include Realized Cap Impulse, MVRV Z-Scoreand Net Unrealized Profit and Loss (NUPL).
Right now, data from Realized Cap Impulse shows that new money is coming out of XRP. As for the MVRV Z-Score, which sits right at the key level, the metric advises on the continuation of the bear market or the last on-chain support. Meanwhile, NUPL is also in its transition line, and another drop means that many XRP transactions will turn into unrealized losses.
XRP is now sitting squarely at the critical point of the on-chain revolution. In other words, the altcoin is in a fragile state. If the price drops slightly, the data suggests that conditions may deteriorate quickly, paving the way for an extended bear market and a possible pullback phase.
Alphractal also highlighted that if the 3 metrics show extended weakness, ongoing selling pressure is likely to increase in the coming days. Therefore, this makes time critical for monitoring and data-driven decision-making for positioning before this happens or walking down.
Short-Term Owners Are Great Sellers
XRP’s current decline is not entirely surprising, given the increasing selling pressure it is experiencing its owners. Steph is a Crypto, market analyst and trader, revealed that renewed sales activity comes from short-term holders, who appear to be the main source of distribution.
The data shows that wallet addresses aged between 1 week and 1 month have experienced a decline from 5.27% to 3.6% in the past few days. Meanwhile, wallet addresses falling under the 1 to 3 month category fell from 11.53% to 9.29%. When new market players exit their positions in volatile situations, it is often due to weak belief in the altcoin and high risk tolerance.
While these short-term holders often sell their coins, Steph Crypto emphasized that long-term holders do the opposite. These investors are not selling and holding on to their coins. Currently, only weak hands are trading in the market.
Featured image from Freepik, chart from Tradingview.com
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