Ripple (XRP) price has leaped by 16% this year, dismal compared to the 35% cumulative growth in the global crypto market capitalization.
Ripple XRP Losing Whale Traction as Buy Pressure Flattens
After its early 20% surge in Jan., XRP price has delivered a sideways price movement since the start of Feb. This price drop is largely due to the recent decline in the volume of whale transactions on the Ripple network.
Ripple (XRP) Price, Whale Transaction Count, and Network Traction Feb. 8. Source: Santiment
XRP network traction has shown that active addresses on Ripple have declined persistently since Feb 3, while the frequency of transactions exceeding $100,000 has also slid, by nearly 62%.
Another critical metric that has slowed down XRP price this year is the intense sell-off from investors holding balances of 10 million to 100 million XRP.
XRP Wallets 10 million to 100 million tokens. Source: Santiment
Historically, when wallet balances of XRP holders within this supply range enter a decline, it coincides with a major price slump.
Why is XRP Price Falling?
XRP price started falling around Jan. 18 after Ripple CEO Brad Garlinghouse announced the company expected to obtain a ruling on the protracted legal dispute with the SEC “potentially” in the first half of this year.
On-chain data shows as the announcement dominated public discourse in the crypto space, increased negative perception surrounding XRP has coincided with the recent price drop.
XRP Price and Weighted (Social) Sentiment. Feb. 2023. Source: Santiment
According to the social sentiment data compiled by Santiment, both XRP price and weighted sentiment, which is a comparison of positive and negative comments around XRP across crypto-related digital media platforms – have declined progressively since the announcement of the impending ruling on Jan. 18.
Likewise, open Interest metrics have also shown that XRP has struggled to attract new demand in Feb.
XRP Open Interest Feb. 8, 2023. Source: Coinglass
XRP Open Interest has slightly declined from $455 million at the close of Jan to $418 million as of Feb. 8. Open Interest measures the rate at which new trades are opened in the futures market as investors close out their existing positions.
Declining open interest is a bearish signal that denotes that investors are moving money out of the XRP market.
Is XRP a Good Investment For This Month?
As observed in the critical on-chain metrics analyzed above, XRP is currently flashing an overall bearish signal. According to the social sentiment metrics and declining traction on the network, buy pressure is low, and the market prediction is largely pointing towards a flat XRP performance this month.
Short-term XRP market projections currently point towards a sideways movement according to the prevailing Fear and Greed index.
XRP Fear & Greed Index. Feb. 2023 Source: CFGI.io
CFGI’s Fear and Greed index gauge potential XRP price movements by evaluating critical indicators such as trading volume, volatility, social perceptions as well as the order books of top exchanges, to determine the level of interest generated by the token.
XRP’s “neutral“ Fear and Greed score of 54% is an indicator that demand for the alt is currently thinning out, based on the current market conditions and social metrics.
However, in the XRP derivative markets, investors appear to be increasingly piling on long positions.
XRP LONG vs SHORT trades. Feb. 2023. Source: Coinglass.com
As of Feb. 8, the ratio of daily long trades compared to short positions has trended upwards in favor of the bulls. This may mean investors are accumulating XRP at lower prices to front-run a favorable outcome in the SEC case.
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