The crypto market appears to be shifting back into a bearish pattern as the second quarter of the year progresses, with large-cap assets taking the biggest hit over the past few weeks. Against this gloomy backdrop, the XRP token has lost nearly 10% of its value in the last two weeks. Interestingly, despite its recent poor performance, the altcoin is being flagged as one of the assets that the market currently overvalues.
According to the latest on-chain data, XRP could see a price adjustment in the coming weeks.
NVT Ratio Jumps 20% in a Single Week
In a Quicktake post on the CryptoQuant platform, analyst CryptoOnchain suggested that XRP has entered “overvalued” territory. The analyst noted that the altcoin is showing a growing gap between its market value and its actual fundamental utility.
This assessment is based on significant changes in the Network Value to Transactions (NVT) ratio, which compares an asset’s market cap to the daily volume of transactions on its network. This on-chain indicator helps evaluate XRP’s valuation. According to CryptoQuant data, XRP’s NVT ratio has been steadily rising over the past week, jumping 20.3% compared to its three-month average.
“This structural rise in NVT is happening while the price tries to hold near the $1.33 level,” CryptoOnchain wrote in the post.
Typically, a rising NVT ratio means the market is pricing the asset higher than the actual value of transactions happening on the network, which points to overvaluation. However, CryptoOnchain noted that the rising NVT doesn’t tell the whole story.
Looking at XRP’s exchange activity, there’s a clear lack of spot market participation. For example, CryptoQuant data shows that Binance inflows and outflows have both dropped by about 98% compared to their three-month averages. Meanwhile, active deposit addresses on the world’s largest crypto exchange have fallen by 94%.
According to CryptoOnchain, the combination of a rising NVT metric and declining spot market activity suggests that XRP’s price lacks real support from active investors or network usage. This puts the altcoin in a risky position, and its price could drop further as it moves toward its fair value.
XRP Price at a Glance
As of now, XRP is trading at around $1.32, showing no major movement in the last 24 hours.
Featured image from iStock, chart from TradingView
Frequently Asked Questions
Here is a list of FAQs based on the topic Onchain data suggests XRP is overvalued despite weak price actioncould this mean more trouble for bulls
BeginnerLevel Questions
1 What does it mean when someone says XRP is overvalued
It means the current market price is higher than what onchain metrics suggest the asset is actually worth Think of it like a house listed for 500k but similar houses in the neighborhood only sell for 300k
2 What is onchain data
Its data recorded directly on the XRP Ledger such as the number of transactions the amount of XRP being moved and how many unique wallets are active It shows real usage not just trading hype
3 If the price is weak how can it still be overvalued
Weak price action means the price isnt rising much or is falling If the price is still too high compared to actual network usage it suggests the price could drop further to match the lower level of real demand
4 Does this mean XRP will definitely crash
No its a warning sign not a guarantee Markets can stay overvalued for a while due to sentiment news or large holders not selling But it increases the risk of a price drop
5 What is a bull in this context
A bull is someone who believes the price will go up The question is asking if this overvaluation signal means bad news for people who are betting on XRP rising
Intermediate Advanced Questions
6 Which specific onchain metrics suggest XRP is overvalued
Common ones include
MVRV Ratio If this is high price is far above the average cost of all coins moved
NVT Ratio A high NVT means the market cap is high relative to transaction volume suggesting speculation over utility
Dormant Supply If old coins start moving it can signal selling pressure
7 Could the weak price action itself be the reason the data looks overvalued
Yes If price is stagnant but network usage drops even faster the valuation gap widens Weak price