- XRP experienced a swift rise in dormant activity, subsequently leading to a 12% decline in its price.
- The decreasing mean dollar invested age (MDIA) provided some optimistic signals for long-term investors.
Last week, Ripple [XRP] witnessed a spike in whale activity, with investors holding over $5 million owning 55% of the total token supply. This level of concentration among whales can trigger considerable price fluctuations, similar to what occurred on July 10, 2023.
The price has also been in a steady consolidation phase over the past few months, struggling to exceed the resistance level at $0.7, which has persisted since August 2023. On-chain metrics indicated that short-term selling pressure on XRP might intensify.
Largest spike in dormant circulation in over a year
On September 2, there was a notable surge in dormant circulation, indicating a significant uptick of activity among XRP addresses. A similar spike was recorded in June 2023.
Typically, such an increase in this metric signals an impending major price correction. Following this pattern, XRP experienced a correction within the next four days, plummeting 12.18% from $0.572 to $0.502.
Although the development activity for XRP has been robust, its valuation remains surprisingly low in comparison to larger industry players like Cardano [ADA]. Meanwhile, the daily active addresses have been relatively stable over the past six weeks.
Evaluating the potential for capital flow into the network
The estimated leverage ratio rose alongside prices in mid-July but has since stabilized. The lack of movement over the last month indicates that traders have been hesitant to engage in margin positions.
This reinforces the notion that XRP is currently in a consolidation phase.
In September, the mean coin age dropped significantly, supporting the earlier findings regarding dormant circulation. Although this distribution has slowed down in the last two weeks, the mean coin age appears to be gearing up for an upward trend.
Whether it is feasible or not, here’s XRP’s market cap in terms of BTC
More importantly, the rapid decline in the mean dollar invested age (MDIA) emerged as a key factor. When the MDIA rises, it signals that investments are becoming stagnant, with old coins remaining in the same wallets.
A downward trend, conversely, suggests that the token may be primed for price growth. It indicates a return of investments into circulation, hinting at increased network activity.
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