The cryptocurrency market appears to be reverting to a bearish trend as the second quarter of the year progresses, with large-cap assets experiencing the most significant losses in recent weeks. Amidst this challenging market environment, the XRP token has declined by nearly 10% in the last two weeks. Interestingly, despite its recent performance, the altcoin is being flagged as potentially overvalued by the market. According to recent on-chain data, XRP could undergo a price correction in the coming weeks.
NVT Ratio Climbs 20% In A Single Week
In a Quicktake post on the CryptoQuant platform, CryptoOnchain suggested that XRP has entered “overvalued” territory. The market analyst noted an increasing divergence between the altcoin’s network market valuation and its fundamental utility.
This assessment is based on significant changes in the Network Value to Transactions (NVT) ratio, which compares an asset’s network value (market capitalization) to the daily transaction volume on the network. This on-chain indicator provides insight into XRP’s valuation.
According to CryptoQuant data, the XRP NVT ratio has risen steadily over the past week, increasing by 20.3% compared to its three-month baseline. “This structural rise in NVT occurs while the price attempts to consolidate near the $1.33 level,” CryptoOnchain wrote in the Quicktake post. A rising NVT ratio typically suggests that the market is pricing the digital asset higher than the actual value of the assets being transferred on the network, indicating overvaluation.
However, CryptoOnchain also noted that the rising NVT indicator doesn’t provide a complete picture. Examining XRP’s exchange activity reveals a lack of spot market participation. For example, CryptoQuant data shows that Binance inflows and outflows have both decreased by approximately 98% compared to their three-month averages. Meanwhile, active deposit addresses on the world’s largest crypto exchange have declined by 94%.
According to CryptoOnchain, the combination of the rising NVT metric and the decline in spot market participation suggests that the XRP price lacks fundamental support from active investors or network usage. This situation puts the altcoin in a precarious position, potentially leading to a price decrease as it seeks its fair value.
XRP Price At A Glance
As of this writing, the price of XRP is approximately $1.32, with no significant movement in the past 24 hours.
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