XRP has experienced a notable 9% decline in its value since reaching its apex of $3.41 on January 16, influenced by a consistent rise in sell-offs. These sell-offs have exerted downward pressure on the cryptocurrency's price, suggesting further declines may be imminent.
Recent on-chain data reveals that profit-taking is contributing to XRP's price decrease. Analysis by Santiment indicates that the Network Realized Profit/Loss (NPL) for XRP has consistently shown positive numbers over the past week. This pattern reveals that investors are offloading their tokens at a profit.
The NPL of a cryptocurrency measures the variance between the selling price and the current market price, illustrating the net profit or loss realized by investors. A positive NPL suggests more investors are gaining from sales than losing, leading to increased market supply. This, in turn, can depress prices if demand does not absorb the surplus.
Moreover, XRP has exhibited a significant increase in its Exchange Flow Balance, underscoring the surge in sell-offs recently. According to Santiment, this metric has jumped by 105% since January 17, right after XRP hit its new peak.
This Exchange Flow Balance metric traces the net movement of assets into and out of exchanges, providing insights into market sentiment. A spike indicates a rise in deposits, typically implying traders are preparing to sell, which may exert additional downward pressure on prices.
As of the latest reports, XRP is trading at $3.09. Should the trend of sell-offs continue unabated, XRP could face further depreciation, potentially reaching $2.45 where strong support may stabilize the price.
Conversely, if the pace of profit-taking diminishes, XRP might see a reversal in fortunes, with the possibility of reclaiming its previous all-time high. The potential price recovery is contingent on changes in investor behavior and broader market dynamics.