XRP Flashing Overvaluation Signals – Traders, Here’s Why You Should Care

Ripple’s XRP is showing classic signs of overheating—just as the ’smart money’ starts eyeing the exits. Time to pay attention.

The red flags no one’s talking about

On-chain metrics reveal whale wallets quietly dumping while retail FOMO kicks in. Sound familiar? *Cough* 2017 vibes *cough*.

Liquidity crunch incoming?

Exchange reserves are drying up faster than a DeFi project’s treasury post-hack. When the music stops, not everyone gets a chair.

The institutional paradox

VCs preach ’blockchain adoption’ while their algo traders front-run your limit orders. Stay sharp—this isn’t your grandma’s bull market.

Bottom line: XRP’s fundamentals haven’t changed. The only thing pumping? Trader desperation and that one hedge fund intern’s PowerPoint slide. *Plays ’The Sound of Silence’ over 15-minute chart*

Supply shrinks as valuation risks emerge from…

XRP’s Exchange Reserve dropped by 3.22%, totaling $7.28 billion.

This decline implies a reduced supply of tokens available for immediate selling, which typically supports bullish market conditions.

When fewer coins remain on exchanges, the likelihood of intense sell-offs diminishes. Therefore, this trend may reflect long-term holder confidence and accumulation. 

Source: CryptoQuant

However, the NVT Ratio spiked to 2,806—an unusually high level. This indicates a sharp divergence between market cap and actual transaction activity, which often precedes local tops.

Consequently, this could signal overvaluation and a possible short-term correction if on-chain activity fails to pick up. 

Short-term holders begin booking profits

XRP’s Development Activity ROSE to 20.21, indicating renewed technical focus behind the project.

This rebound could suggest upcoming feature rollouts or protocol improvements, often interpreted as a long-term bullish sign. 

Sustained development not only fosters ecosystem growth but also attracts investor confidence. However, the impact of this trend on near-term price movement depends on whether technical upgrades align with market demand and adoption narratives within the crypto space.

Source: Santiment

In contrast, Spent Output for 1- to 7-day-old coins dipped to 12.22 million, indicating reduced short-term selling pressure.

This cooling off of activity suggests holders are holding through volatility rather than exiting, a possible sign of trust in further upside.

However, traders should watch for any reversal in this trend, especially NEAR resistance levels.

Technical indicators show mixed signals 

Ripple’s (XRP) price tested and briefly rejected the 0.786 Fibonacci level at $2.66 before falling back below $2.5. The MACD still shows a bullish crossover, but momentum appears to be weakening as the signal line approaches convergence. 

Additionally, strong resistance looms at $3.00, a level previously tested and rejected earlier in the year. 

Therefore, despite recent upside momentum, technicals point to indecision as bulls face critical overhead resistance that could shape the next move.

Source: TradingView

XRP’s MVRV Ratio has recovered to 253.11% after dipping in early April. Although the figure suggests holders are in profit, it still remains well below peaks seen in previous months.

This moderate rebound indicates reduced pressure from unrealized profits, potentially lowering the risk of immediate sell-offs.

However, if the price continues to rise without meaningful changes in on-chain utility, the MVRV could quickly return to danger zones.

Can XRP sustain bullish sentiment despite conflicting signals?

Although XRP’s sentiment has turned bullish, its sustainability remains in question.

Declining exchange reserves and rising development activity support the bullish case, but overvaluation signals from the NVT and MVRV ratios suggest caution.

With short-term holders holding back and technical momentum slowing, XRP needs a strong breakout above $2.66 to confirm continuation. Until then, the current uptrend faces critical tests from both the charts and the chain.