$XRP recently showed signs that it could turn bullish after a turbulent month. In fact, the month dragged the altcoin to a 41% year-to-date loss. However, at the time of writing, on-chain data seemed to indicate the type of setup that preceded its last major price rise.
Whale activity and network results relative to market capitalization appear to indicate that the token is significantly undervalued, reflecting the conditions that fueled its previous rally.
$XRPFlush leverage echoes 2024 setup
The estimated leverage ratio (ELR) of the $XRP Ledger, which measures the extent of leveraged capital channeled into $XRPhinted at the token repeating the pattern that led to its 2024 rally.
During this period, ELR fell to a low of around 0.05 on the chart. A massive wave of leveraged positions in $XRP followed, and the price rose sharply shortly after.
The color gave way to a significant run that reached 790%. At press time, CryptoQuant data was revealed $XRP Enter a debt reduction phase again.
Analysts believe, however, that it is neither a fractal nor a guaranteed sign that $XRP will rally.
Anyway, $XRP‘s open interest over the past year reflects this unwinding, dropping from $10.94 billion to $2.39 billion, a decline of about 78%. This marked a net exit from the leveraged capital market worth approximately $8.55 billion.
Are $XRP whales accumulate regularly?
Although leverage does not guarantee a rally, on-chain data has also been following an interesting trend that could support the overall price.
Whales, investors controlling a significant amount of capital, came to dominate $XRPAverage spot order size. This seems to imply that they are currently the most influential power in the market.
Data on foreign exchange reserves can, however, give us clearer context on what this group is doing. The chart hints at a decline in reserves, with their figure falling from 2.62 billion to 2.61 billion as of July 10.
In monetary value, approximately $57 million flowed out of exchange balances into private wallets, displaced by these whale wallets during the same period. Such a discovery generally signals a continuous but progressive accumulation of the asset, strengthening its overall structure.
NVT ratio points to undervaluation
Finally, an analysis of the network value versus transactions (NVT) data on the chart showed that $XRP could currently be undervalued.
The NVT ratio determines undervaluation or overvaluation by weighing market capitalization against market trading volume. When the ratio is at the lower end of its historical range, it implies that the asset is undervalued and has been oversold.
At the time of writing, the NVT ratio was 312.8, implying that the network’s transaction activity has been minimal.
Until there is a clear rise in NVT, there is a good chance that the market will remain undervalued. In fact, these results also prove that whales may be buying $XRP when it trades at a discount.
Final summary
- $XRP now reproducing the same market conditions that prevailed before its 790% increase in 2024.
- Large investors buy and withdraw quietly $XRP excluding exchanges.
