The Rise of XRP Prices May Be Coming to an End: On-Chain Data Shows This

Ripple's XRP has been on a bullish trend since June 22, surging nearly 30% in the past two weeks. This rally is partly driven by renewed interest across the market, pushing many assets to their highest levels in weeks. However, there is still a noteworthy point. Despite the optimistic sentiment, two key on-chain signals indicate the possibility of prices falling back. XRP Rally Faces Challenges as Long-Held Coins Return to the Market Since XRP fell to a cycle low of $1.90 during the trading session on June 22, its price has maintained a bullish trend. Up nearly 30% since then, this altcoin is currently trading at $2.58. Since the rally began, the Dormancy Flow of XRP has been steadily increasing. On-chain data shows that this metric also hit its lowest level of the year on June 22, but has been on an upward trend since then. At the time of writing, the Dormancy Flow reached 1.19 billion XRP.

Dormancy Flow indicates whether long-term holders (LTH) are actively spending or holding steady. When this metric declines, especially to a record low, it suggests that the coins being traded are still relatively "young," and long-term holders remain inactive. This occurs in a bear market or accumulation phase, when prices are low and confidence is high among long-term holders. Conversely, like XRP, when the Dormancy Flow of an asset increases, it indicates that old, inactive coins are being moved or sold. This activity is often seen in the later stages of a bullish market, when long-term holders begin to take profits after a significant rally. The Dormancy Flow of XRP is increasing, reflecting that experienced investors are confident enough to sell, a trend that could cause a bearish reversal in the coming days. Traders May Want to Lock in Profits Additionally, according to Glassnode, the Net Unrealized Profit/Loss index (NUPL) of XRP puts the market in a "trust" state. At the time of reporting, this index was at 0.56 and continues to rise.

NUPL measures the difference between the current price of an asset and the price of its currency. When this index enters the Confidence phase, it signals that investors are holding significant unrealized profits. If this happens after a long period of low prices - like what has been seen with XRP - then holders may increasingly feel tempted to sell and secure profits.

When long-term holders start to move their coins, this phase can trigger a wave of selling pressure, potentially causing a short-term price correction for XRP. XRP Bulls Show Signs of Exhaustion On the daily chart, the Relative Strength Index ( RSI ) of XRP indicates that the market may be overheating. At the time of writing, the RSI of this token is above 70, reaching 72.95, signaling an impending exhaustion of buyers. The RSI indicator measures the overbought and oversold conditions of an asset in the market. This indicator oscillates between 0 and 100. A value above 70 indicates that the asset is overbought and is likely to fall, while a value below 30 indicates that the asset is oversold and may recover. At 72.95 and continuing to rise, the RSI indicator of XRP signals that the bullish momentum is about to cool down. Traders may interpret this as a profit-taking signal, adding further pressure on the price of XRP. If demand stagnates in the next few trading sessions, the price of XRP may fall to $2.45.

However, if buying pressure continues to increase, XRP could rise to $2.65. {spot}(XRPUSDT)