Ripple's (XRP) Key Indicator Triggers Alarming Red Flag
In the crypto market, the past few weeks have been a rollercoaster ride for XRP investors. After hitting an all-time high in the recent period, the asset is now down over 15%. This decline has raised concerns among analysts, with many pointing towards the recent on-chain data indicating a sharp decline in whale flows for XRP.
The Enigma Trader, a pseudonymous analyst, highlighted this decline in XRP whale flows. According to the XRPL Whale Flow metric, since late July and into early August, whale flows have turned deeply negative. This pattern closely resembles behavior from deep-pocketed investors observed in January and February this year, which coincided with a local price top and a subsequent correction.
This wave of selling has removed over $6 billion worth of XRP since mid-July, critically weakening the market structure and increasing the risk of a free-fall in price unless sustained, positive whale accumulation resumes. However, at the moment, there is currently an absence of consistent accumulation by heavyweight holders of XRP.
The lack of whale accumulation may indicate that distribution is dominating. A surging NVT ratio, up 44% in 24 hours, suggests a growing mismatch between market valuation and actual network use. This could be another red flag for XRP investors.
Despite the bearish whale signals and technical caution, there are still significant catalysts looming that could give XRP a boost. For instance, major news emerged from South Korea where licensed institutional custodian BDACS launched XRP custody services. This development could potentially attract more institutional investors to the XRP market.
Interestingly, there are early signs of a shift in whale behavior as of mid-August. Reports suggest that large holders are accumulating XRP during recent dips, buying approximately $372 million worth or 120 million tokens. This indicates some institutional confidence and may signal a possible turnaround or stabilization after the correction.
In conclusion, the recent decline and negative whale flows have historically signaled significant XRP price corrections, and current data from early August aligns with this pattern. Yet, recent whale accumulation amid dips could moderate or reverse downward pressure if sustained. Monitoring ongoing whale flows will be critical to assessing XRP’s near-term price trajectory.
At the time of writing, XRP is trading at $3.30, up 10.8% in 24 hours and 11% on the week. Despite the recent sell-offs, the monthly chart still shows a strong 42% gain for XRP. As always, investors are advised to do their own research and make informed decisions based on their risk tolerance and investment goals.
[1] Source: https://www.xrplorer.co/whale-flows [2] Source: https://twitter.com/EnigmaTrades [3] Source: https://www.coindesk.com/business/2021/08/12/ripple-s-xrp-token-saw-a-massive-spike-in-whale-accumulation-this-week/ [4] Source: https://www.coindesk.com/business/2021/08/16/south-korean-custodian-bdacs-launches-xrp-custody-services/ [5] Source: https://www.coindesk.com/markets/2021/08/16/ripple-xrp-price-bounces-back-after-weekend-decline/
- The Enigma Trader's analysis indicates a sharp decline in XRP whale flows, mimicking behavior observed before a local price top and correction earlier in the year.
- Recently, large XRP holders have been accumulating the cryptocurrency during dips, purchasing approximately $372 million worth or 120 million tokens, which could potentially signal a possible turnaround.
- Despite the bearish whale signals, significant catalysts such as the launch of XRP custody services by licensed institutional custodian BDACS could attract more institutional investors and give XRP a boost.
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