On-Chain Data Shows XRP Price Bottom Might Be Further Below — Here’s Why

Overview

Recent analysis of the XRP market indicates that the cryptocurrency may not have reached its local price bottom, despite some stabilization in its performance. This insight, based on on-chain data, suggests that further downside movement could be possible in the near to mid-term.

XRP Price Analysis

After a lackluster performance in the initial months of the year, the price of XRP has shown signs of steadiness, leading to renewed hope among investors. However, on-chain analyst Joao Wedson has provided a cautionary perspective, asserting that XRP has yet to enter the early phases of a price rebound. His analysis hinges on the Number of Days Spent At A Profit metric, which tracks how long current holders have been in profit compared to historical price levels.

This metric offers insight into market sentiment and price movements. According to Wedson, the current state of this indicator suggests that XRP is trading significantly below historical benchmark levels. Historically, extreme levels in this metric have correlated with price rebounds, but the current data indicates that XRP has not yet reached these hallmark zones. This discrepancy raises concerns that the cryptocurrency could face further downside in the near future.

Wedson also emphasized that reaching these historical benchmark levels is a prerequisite for forming patterns that typically precede the establishment of price bottoms. Therefore, the current data implies that XRP may still be on a downward trajectory before potential recovery.

Growth in XRP Ledger

In addition to price analysis, blockchain analytics firm Santiment has reported notable growth within the XRP Ledger. A significant increase in the number of small wallets, often referred to as ‘shrimps’ (those holding less than 100 XRP), has been observed. This group of investors has expanded to approximately 5.66 million separate addresses, indicating a trend of widespread adoption among retail investors and everyday users.

Moreover, wallets holding between 100 and 100,000 XRP have also seen growth, totaling around 2.01 million. This mid-tier group represents a substantial portion of the XRP network and suggests an influx of more serious accumulators into the market.

Conversely, the number of large-holder wallets, those containing over 100,000 XRP, has shown minimal growth, capped at around 32,054. This stagnation among larger investors indicates that they may be more focused on distribution or repositioning rather than accumulating, which could further contribute to the downward pressure on XRP prices.

From author

The current analysis of XRP’s market dynamics presents a complex picture. While there is optimism among smaller investors reflected in the growth of wallets, the overarching sentiment among larger holders and the on-chain data suggests caution. The relationship between the Number of Days Spent At A Profit and price movements highlights the intricacies of market psychology and the potential for further declines.

Impact on the crypto market

• The analysis indicates that XRP may not have reached its local price bottom, suggesting potential for further declines.
• Widespread adoption among smaller investors may not be enough to counterbalance the hesitance of larger holders.
• The growth in small wallets reflects a trend toward retail participation in the XRP market.
• The stagnation of large-holder wallets raises questions about market confidence and future price movements.
• The interplay between on-chain metrics and investor behavior could influence broader market sentiment for altcoins.