XRP Price Holds at $2: Correction Imminent?

XRP Price Stability: A Deceptive Calm?

XRP has maintained a $2 floor, but underlying indicators suggest potential instability. While price consolidation often precedes a rally, a decline in network activity—fewer transactions and active users—paints a different picture. This quiet period might signal market pullback rather than strength.

Signs of Overvaluation

XRP trades 307% above its Election Day opening price. Since November, it has retested the $2 support four times, triggering sharp V-shaped recoveries. However, the April 7th retracement to $1.60—the lowest close in five months—raises concerns about vulnerability to deeper corrections. This suggests a weakening bid wall and potential overvaluation.

Source: TradingView (XRP/USDT)

Weakening Network Activity: A Red Flag

Strong network activity is crucial for sustained price growth. However, XRP shows signs of contraction. New wallet addresses dropped 44% in the last month (from 5,200 to 2,900), indicating a slowdown in retail onboarding. This is supported by a significant spike in the Network Value to Transactions (NVT) ratio.

Source: Glassnode

A rising NVT ratio suggests price increases outpacing actual network usage. This, coupled with recent price retracements and decelerating network growth, indicates XRP might be trading at a premium compared to its network fundamentals. This divergence signals a potential price correction.

Conclusion

While XRP's $2 price point appears stable, waning network activity and the recent price drop raise significant concerns. These indicators suggest potential overvaluation and increase the likelihood of a near-term price correction. Investors should monitor these metrics closely.

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