XRP has been on a volatile ride lately. Although the altcoin recently climbed 22% in just two weeks, signs suggest that this rally may not last. Despite forming a potential bullish breakout pattern, analysts are cautious due to strong overvaluation signals.
NVT Ratio Signals Market Overheating
One of the clearest warning signs is XRP’s network value-to-transaction (NVT) ratio, which just surged to its highest level in five years. The NVT ratio compares a coin’s market cap to its transaction volume. When this ratio spikes, it typically means prices are rising faster than actual usage or demand.
Historically, such NVT peaks have signaled upcoming price corrections. The last time XRP’s NVT reached similar levels was back in January 2020—right before a major decline.
Momentum Indicators Show Weak Support
Even though XRP’s price is climbing, indicators like the Chaikin Money Flow (CMF) suggest the momentum isn’t backed by strong buying activity. CMF has spiked recently, usually a bullish sign. But in this case, the volume of inflows doesn’t match the price surge, implying that speculation, not real investment, is driving the rally.
This disconnect makes the current price rise look unsustainable.
Breakout May Be Short-Lived
Currently, XRP is trading around $2.19 and appears to be breaking out of a three-month descending channel. However, overvaluation and weak volume raise concerns about whether this breakout can hold.
If the rally loses steam, XRP could fall back to $2.02—or even dip to $1.94. These levels act as critical support zones in case the price retreats.
What If XRP Defies the Odds?
There is still a bullish scenario on the table. If XRP can maintain its breakout and flip $2.40 and $2.56 into support, the bearish outlook could be invalidated. A successful hold above those levels might open the door for further gains.
But for now, caution is warranted. With technical signals flashing red and hype outweighing fundamentals, XRP’s current rally may be short-lived.
