After rising above the multi-year high, the price of Ripple (XRP) was trading marginally lower yesterday with a 22% crash. According to on-chain data, buyers of XRP make money following a significant rally, which heightens selling pressure and portends a brief decline in the days ahead.
XRP On-chain Metrics Analysis
Between early November and early December, the price of ripple increased more than four times. Another potential danger for Ripple following such a significant rally is profit-seeking. Holders should book earnings at the top using the Sentiment's Network Discovered Profit or Loss (NPL) indicator.
On December 1, XRP's NPL metric increased, showing that holders typically profit when they sell their bags. Following a rally in the previous month, which resulted in a correction of more than 35% in the following two weeks, a similar peak was observed on May 1, 2021. In the short run, XRP might experience a similar decline if history repeats itself.
The long-to-short percentage for XRP is 0.85, the lowest ever recorded in a month. A ratio below one indicates that more traders expect the asset's price to decline; it indicates that the market is negative and that a decrease in the price of ripples may be imminent.
