The price of Ripple’s XRP token has increased by 9% in the past 24 hours. However, this is a typical “dead cat bounce” often observed during broader market downturns, as traders continue to bet on a short-term rebound for XRP.
On-chain data shows demand for the altcoin is steadily declining, with XRP holders likely selling for profits.
Ripple number: Short-term rebound does not relieve pressure
A “dead cat bounce” refers to a temporary recovery in asset prices after a sharp decline. Ripple plunged to a 30-day low of $0.43 during Monday’s market downturn.
As the market began to rebound, XRP staged a fatal rally, with its price surging by 12% in the past 24 hours. However, data from on-chain and daily price charts shows that the altcoin has the potential to resume its downtrend.
BeInCrypto observed a negative price differential with Daily Active Addresses (DAA). This metric compares an asset’s price movement to daily changes in the number of active addresses. Investors are tracking this to see if online activity supports price action.
As of the time of writing, XRP’s price DAA differential is -51.65%. When the price rises, DAA price divergence is negative meaning that neither user activity nor network participation is supporting the rise. These differences always indicate a weak and unsustainable rebound.
Additionally, the fact that XRP has a positive market cap to realized value (MVRV) ratio has also put selling pressure on it. As of this writing, the altcoin’s MVRV ratio is 30.88.
Read more: How to buy XRP and everything you need to know
An asset’s MVRV ratio measures the ratio between its current price and the average price earned by all circulating tokens. If the value is above 1, it means that the asset is trading above its cost basis for investors who own many assets.
XRP has an MVRV ratio of 30.88, which means the altcoin is significantly overvalued. Especially if bearish sentiment builds, holders may sell for a profit. This will put pressure on prices and disrupt the upward trend in the short term.
XRP Price Prediction: An upcoming drop of $0.50
If selling pressure increases, XRP will give up its recent gains and resume its downtrend. In this case, the price may drop to $0.46.
Learn More: Ripple (XRP) Price Prediction 2024/2025/2030
However, if buying activity resumes and enough demand supports the current rally, the price of XRP could rise to $0.52.
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