XRP prices are up 16 percent so far this year, below the cumulative growth rate of the global cryptocurrency market capitalization of 35 percent.
Ripple lost charm with Whales when buying pressure dips
After rising 20% in early January, XRP has been trending sideways since early February, with the price drop largely due to a recent decline in whale trading on the Ripple network.
The traction of the XRP network shows that the number of active addresses on Ripple has steadily declined since February 3, while the frequency of transactions over $100,000 has also dropped by almost 62%.
Another key indicator that has driven down XRP prices this year has been the strong sell-off by investors holding balances between 10 million and 100 million XRP.
The number of wallets is 10 million to 100 million Ripple | Source: mood
Historically, when the balances in the wallets of XRP holders started to drop within this supply range, it coincided with a sharp price drop.
Why is the XRP price falling?
XRP price started to drop around Jan. 18 after Ripple CEO Brad Garlinghouse notify The company is expected to deliver a ruling in its long-running legal dispute with the US Securities and Exchange Commission (SEC), “probably” in the first half of this year.
On-chain data shows that the increase in negative perception surrounding XRP coincides with the recent price drop as the announcement spread throughout the crypto space.
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according to data Since the announcement of the upcoming ruling on Jan. 18, social psychology research compiled by Santiment shows that both XRP price and weighted sentiment (comparing positive and negative comments surrounding XRP on crypto-related digital media platforms) have declined.
Likewise, the open interest (OI) indicator also showed that XRP struggled to attract new demand in February.
Ripple OI | Source: coin glass
XRP open interest fell slightly from $455 million at the end of January to $404 million at press time. Open interest measures the rate at which new positions in the futures market are opened while investors close their positions.
A drop in open interest is a bearish sign that investors are pulling money out of the market.
Is XRP a good investment this month?
As observed in the key on-chain metrics analyzed above, XRP is currently signaling an overall bearishness. Buying pressure is now at low levels, with market expectations mostly targeting an unchanged performance for the month, according to declines in social sentiment and online attractiveness indicators.
Short-term forecasts currently point to a sideways movement on the popular fear and greed index.
XRP Fear and Greed Index February2023 | Source: CFGI.io
The CFGI Fear and Greed Index assesses potential volatility by looking at key metrics such as trading volume, volatility, social awareness, and order books on top exchanges to determine the level of interest a token is generating.
XRP has a “neutral” fear and greed score of 54% — based on current market conditions and social indicators that suggest demand is currently dwindling.
However, in the XRP derivatives market, investors appear to be increasingly accumulating long positions.
trade Long and Short XRP in February2023 | Source: coin glass
As of Feb. 8, the daily long-to-short ratio was trending upwards in favor of the bulls. Therefore, it is possible for investors to accumulate XRP holdings at low prices in order to achieve a favorable outcome in the lawsuit with the SEC.
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According to Beincrypto