XRP, the seventh-largest cryptocurrency by market capitalization, has experienced a notable decline in recent weeks, shedding nearly 10% of its value. While some investors see this as a chance to “buy the dip,” on-chain data and technical indicators suggest that XRP’s downturn may not be over just yet.
Recent data reveals that XRP might be undervalued, with its market value to realized value (MVRV) ratio turning negative. The 30-day MVRV sits at -3.85, and the 90-day MVRV is at -2.66. These figures indicate that the current price is below the average cost of all XRP tokens in circulation, making it attractive for traders seeking to capitalize on discounted prices. A negative MVRV often signals a buying opportunity for long-term holders, as it suggests the asset is being traded below its historical cost basis.
Despite these signs of undervaluation, XRP continues to face significant negative sentiment in the market. Its weighted sentiment score is currently at -0.18, which reflects the pessimism that has dominated social media conversations surrounding the asset. Negative sentiment typically signals ongoing fear, uncertainty, and doubt (FUD), further dragging the asset down.
The technical setup for XRP paints a grim picture for its short-term prospects. The Elder-Ray Index (ERI), which tracks buying and selling pressure, indicates that sellers have outpaced buyers since late August. The index has recorded only negative values, underscoring the dominance of selling pressure in the market.
Adding to the bearish sentiment, the Directional Movement Index (DMI) shows the positive directional indicator (blue) sitting below the negative directional indicator (red), confirming that XRP remains in a downtrend. With selling pressure outweighing buying interest, the chances of a recovery in the short term seem slim.
Given these factors, XRP risks further losses. The altcoin is hovering around a crucial support level of $0.45, and a break below this threshold could push the price down to $0.38. For investors hoping to buy XRP at this lower price, patience may be key.
Also Read: XRP Price Set For Major Rally? Key Metrics Show 7-Month Low In Exchange Supply Amid 2% Daily Surge
However, there’s still hope for a potential rebound. If market sentiment shifts and buyers return, XRP could rally back towards $0.65. For now, though, cautious optimism is warranted, as the technical setup suggests that the asset may face further challenges before any significant recovery.
XRP’s recent dip may appear to be a buying opportunity, with its undervalued status attracting attention from some traders. However, with ongoing negative sentiment and bearish technical indicators, the asset could face more downward pressure in the near future. Investors should weigh the risks carefully, as XRP’s road to recovery remains uncertain.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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