XRP’s NVT ratio signals overvaluation

The Network Value to Transaction (NVT) 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.

XRP’s NVT ratio has fluctuated sharply in December, indicating instability. The current spike in the ratio reflects a disconnect between XRP’s price and the underlying transaction activity on the network.

While the price sits at $2.23, the high NVT ratio signals that market cap growth is outpacing network utility, a bearish sign. Unless transaction volumes catch up, XRP may face heightened correction risks, challenging the bullish momentum observed in recent weeks.

XRP: Reduced network activity?

The Price-Daily Active Addresses (DAA) divergence reveals a concerning trend for XRP’s rally. This metric assesses whether price movements align with user engagement on the network.

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.

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Author: Samantha LKM