XRP On Edge: Supply Hits Historical High-Risk Levels, Brace For Impact?
January 18 2024 - 11:00AM
NEWSBTC
Data shows the XRP supply in profit is currently at levels that
have historically put the cryptocurrency’s price in a high-risk
zone. XRP, Bitcoin, And Ethereum Are All In High-Risk Zone Right
Now According to data from the on-chain analytics firm Santiment,
Bitcoin, Ethereum, and XRP are assets that may be in a high-risk
zone currently when compared to their historical averages. The
indicator of interest here is the “Percent of Total Supply in
Profit,” which, as its name suggests, tracks the percentage of the
total circulating supply of any cryptocurrency with some unrealized
profit. This metric works by going through the transaction history
of each coin in circulation to see what price it was last
transferred on the blockchain. Assuming that the last movement of
any coin was changing hands (that is, a new holder bought it), this
last transfer price would naturally reveal its profit-loss status.
Related Reading: HODLing Rewards: Average Bitcoin Long-Term Holder
Now Carries 55% Profit If this previous price for any coin was less
than the current spot value of the asset, then that particular coin
can be considered to be in profit at the moment. The Percent of
Total Supply in Profit adds up all such green coins and calculates
what percentage of the supply they make up for. Now, here is a
chart that shows the trend in the Percent of Total Supply in Profit
for Bitcoin, Ethereum, and XRP over the past few years: Looks like
the metric's value has been quite high for all of these three
assets in recent days | Source: Santiment on X As displayed in the
above graph, the Percent of Total Supply in Profit has recently
been at relatively high levels for all three of these assets. At
present, 81% of the XRP supply is in the green, while the metric’s
value is 83% and 84% in the case of Bitcoin and Ethereum,
respectively. Generally, the investors holding their coins at a
profit are more likely to participate in selling, as the allure of
profit-taking can be overwhelming. As such, the more holders there
are in profit (or, the more supply is in profit), the more likely
it is for a mass selloff to take place for the cryptocurrency.
Based on this relationship between the Percent Supply in Profit and
the prices of the various assets, Santiment has defined three zones
for the indicator, as the chart highlights. Since 2018, XRP, BTC,
and ETH have hovered between an average of 55% to 75% supply in
profit. The assets are currently above this range, so they may be
considered inside the high-risk zone. Related Reading: Bitcoin Has
Large Resistance Wall Ahead: Here’s The Level To Watch “Crypto can
absolutely still climb due to more exposure from ETFs and other
positive news, explains the analytics firm. “But ideally, a great
signal to watch that would imply continued long-term growth would
be a breach below 75% of their supplies in profit once again.” XRP
Price XRP has been unable to recover from its crash near the start
of the month, as its price is still trading around $0.56. And given
the current still-high supply in profit, the pain might only grow
deeper for the asset’s holders soon. The price of the coin has been
sliding off in the last few days | Source: XRPUSD on TradingView
Featured image from Shutterstock.com, charts from TradingView.com,
Santiment.net
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