XRP Forms On-Chain Signal That Led To 16% Crash Last Time
04 Maggio 2024 - 1:00AM
NEWSBTC
On-chain data shows that many old coins have moved on the XRP
network recently, a sign that proved to be bearish for the coin
last time. XRP Age Consumed Metric Has Registered A Large Spike
According to data from the on-chain analytics firm Santiment, XRP
has just observed a large movement of dormant coins similar to what
the asset witnessed last month. The indicator of interest here is
the “Age Consumed,” which shows “the amount of tokens changing
addresses on a certain date, multiplied by the time since they last
moved,” as per Santiment’s definition. Related Reading: Bitcoin
Loses Historical Level, Analyst Says “Reclaim And Bounce, Or Die”
When this metric has a high value, it means that a large number of
coins previously dormant have finally been moved to the blockchain.
Old coins are generally less likely to become involved in selling,
as they belong to the more resolute hands in the market. As such,
any large movements of these coins can be worth noting since it’s
not an event that happens too often. The below chart shows the
trend in this indicator for XRP over the past month or so: The
value of the metric seems to have been quite high in recent days |
Source: Santiment on X From the graph, it’s visible that the XRP
Age Consumed registered a sharp spike at the start of this month,
implying that some old hands have decided to break their silence.
This latest spike has been quite massive in scale and has been
reminiscent of another spike that was seen last month.
Interestingly, this previous spike occurred shortly before the
price of the cryptocurrency tanked 16%. Thus, the previous spike
would have corresponded to some HODLers moving to sell their coins.
It’s possible that the latest large dormant coin movement was also
made for a similar purpose, and hence, it can prove to be bearish
for XRP. Santiment points out that this may not be so after all,
though, saying: There is an argument that this old coin movement is
related to potential #buythedip interest from key stakeholders, and
prices have been climbing mildly since this May spike occurred.
While this dormant coin movement may turn out to be bullish this
time around, there is another signal brewing for the asset that can
also be something to keep an eye on. As highlighted in the same
chart, the Total Open Interest for XRP, which keeps track of the
number of derivative positions currently open on all exchanges
related to the asset, has been going up recently. This metric is
now at a 3-week high of $483.4 million, implying that there is a
notable amount of speculation in the market right now.
Historically, this has led to volatility in the price. Related
Reading: Crypto Analyst Says Cardano “Ready For A Parabolic Bull
Run,” Here’s Why In theory, this volatility can take the asset in
either direction, but it’s worth noting that the crash last month
occurred after the Open Interest hit extreme levels. So far,
though, the indicator hasn’t quite yet reached the same highs. XRP
Price XRP is yet to make any significant recovery from the crash
last month as its price is still trading around $0.52. Looks like
the price of the asset has been overall moving sideways since the
plunge | Source: XRPUSD on TradingView Featured image from
Kanchanara on Unsplash.com, Santiment.net, chart from
TradingView.com
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