Blockchain payments project Ripple, as well as its native token XRP, have been in the news for seemingly all the right reasons this week, with the cryptocurrency’s price rising and a partial victory in a long-running legal battle between Ripple and the US SEC.
These two events have increased the number of comments online, suggesting unprecedented growth for XRP. However, notable observations online suggest that this view may be inaccurate.
Latest Data Points to Caution for Ripple Investors
One of the ways BeInCrypto analyzes the potential performance of XRP is by assessing the Sharpe ratio. This ratio measures the risk associated with a token compared to the return it can offer. A high positive Sharpe ratio means that a good return on investment can be expected.
However, a negative ratio suggests that the cryptocurrency in question does not carry the risk of profit or may suffer losses. According to Messari, XRP has a Sharpe ratio of 3.70.
During the aforementioned rally to $0.65, the ratio was 4.93, suggesting the token was worth buying. At the time of writing, negative readings suggest that this is no longer the case. Therefore, calls for an extended rally may be invalidated.
Read more: Everything you need to know about Ripple and the SEC
The decrease in the coefficient may be related to the fall in the price. On August 8, the value increased by 20% and was traded at $0.65. At the time of printing, it is $0.58.
Additionally, on-chain data from Santiment shows that the average coin age (MCA) has increased. Simply put, MCA is the average of all tokens on the blockchain. When the reading increases, it means that tokens that have been dormant for some time have been moved.
Additionally, the spikes in coin age suggest that those moving tokens are likely to exchange them. However, the low coin age indicates increasing accumulation and suggests that holders are moving tokens to a cold wallet.
If the metric continues to rise, XRP could face another round of selling pressure. So, this may not be the best time to buy the cryptocurrency for short-term gains.
XRP Price Prediction: No Buyers, No Recovery
According to the daily chart, the token failed to build on its previous gains after reaching the supply zone around $0.62 and $0.63. This lack of demand caused a rejection, which saw the price fall to $0.56 before a small rebound.
Furthermore, the moving average convergence divergence (MACD) is negative. MACD uses the difference between the 12-day and 26-day exponential moving averages to determine trend-following momentum.
A positive MACD reading suggests that buyers are in control and the momentum is bullish. However, for XRP, the momentum is bearish, indicating a possible price decline. If this remains the case, the token’s value could fall to the base resistance of $0.55.
Read More: Ripple (XRP) Price Prediction 2024/2025/2030
However, in a very bearish scenario, XRP could fall another 10% to the $0.52 support. The situation could get worse if the SEC appeals and Ripple wins. But if buying pressure intensifies, XRP could jump again. If so, the cryptocurrency could try to retest $0.63.
