The XRP Ledger is flashing a potential warning for traders and investors. The NVT ratio has surged above 280, according to new CryptoQuant data.
This jump may suggest that the price of XRP is rising faster than its actual use on the network, which could indicate the asset is overvalued.
NVT (Network Value to Transactions) is a ratio of the market value of a cryptocurrency to the number of daily transactions on its network. A high NVT ratio implies a reduced flow of tokens through the market. This is often interpreted as a sign that hype is outpacing the fundamentals.
On June 19, data from CryptoQuant showed a steep increase in XRP’s NVT ratio. At the same time, XRP price remained relatively stable around $2.167.
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For short-term traders, this may imply that a price correction is more probable when trading volume fails to rise. Long-term investors might view this as an opportunity to reassess risk exposure.
A very high NVT is not necessarily bullish. In some cases, it may simply indicate that the market expects growth or upcoming developments that haven’t yet materialized on-chain.
However, in the absence of significant underlying causes, a sudden NVT spike is a clear sign that network demand is lagging behind price action.
XRP price down
In recent weeks, interest in XRP has increased due to renewed optimism about a potential XRP ETF approval. This could be the time for traders to pay closer attention to both volume and market sentiment, and to monitor key price levels.
If the NVT remains high without a corresponding increase in network activity, downward pressure may be exerted on the price, causing it to decline.
Conversely, if usage begins to catch up, XRP could stabilize and resume its upward trajectory.
Source: CoinMarketCap
Currently, XRP is priced at $2.13, reflecting a modest 1.44% decline over the past 24 hours. Trading volume has surged by 37.34% during the same period, reaching $2.59 billion.
Some traders might view the recent dip as a buying opportunity, particularly given the potential for a price rebound backed by the rising trading volume.