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XRP has lost 9% in value since reaching a historic peak of $3.41 on January 16, as a continued increase in selling has weighed on its price.
With increased profit-taking, XRP is likely to continue its short-term downtrend.
XRP traders take profits, putting pressure on prices
Reading on-chain data from the XRP Network Net Profit/Loss Index (NPL) confirms increased profit-taking. According to Santiment, the index has consistently returned positive values over the past week, suggesting that XRP holders are selling their tokens for a profit.
A currency’s NPL measures the difference between the price when the asset was last moved or sold and the current market price. It shows how much profit or loss has been “recorded” by the Holder.
When an asset’s NPL is positive, more investors are selling at a profit than at a loss. These sales typically lead to an increase in supply in the market, which can cause asset prices to fall if demand cannot meet the sales.
Furthermore, the strong increase in XRP’s Exchange Flow Balance confirms the increase in token sales over the past week. According to Santiment, the index has increased 105% since January 17, the day after XRP reached a new peak.
An asset’s Exchange Flow Balance index tracks the net movement of assets into and out of exchanges, helping to gauge overall market sentiment. When the index spikes, this indicates an increase in deposits. This usually implies that traders are preparing to sell, putting downward pressure on the asset.
XRP price prediction: Will profit taking push it to $2.45?
At the time of writing, XRP is trading at $3.09. If the selling continues, the value of the third largest crypto asset could fall to $2.45, where there is strong support.
On the contrary, if investors reduce profit taking, XRP’s price could recover and attempt to regain its historical peak.
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