XRP Rally Triggers $1.5B Profit-Taking, MVRV Ratio Flags Potential for Market Pullback
XRP’s impressive ascent to a three-year high last week prompted long-term holders to lock in over $1.5 billion in profits, marking the largest wave of realized gains since April 2021. While profit-taking is expected after such a surge, market indicators hint at a possible slowdown ahead.
The Market Value to Realized Value (MVRV) ratio—a measure of a token’s market valuation compared to its aggregate cost basis—spiked to 217% earlier this week, according to data cited by FXStreet from Santiment. This suggests XRP may be overvalued in the short term, often a precursor to market corrections as profit-taking intensifies.
Catalysts Behind XRP’s Recent Gains
XRP reached $1.60 last week before settling near $1.30, reflecting a robust 31% weekly gain. The rally stemmed from several positive developments, including easing regulatory concerns for Ripple Labs, the introduction of innovative financial products on the XRP Ledger, and technical indicators pointing to further upside.
Additionally, Ripple announced plans to back the newly rebranded Bitwise Physical XRP ETP (formerly ETC Group Physical XRP). This move pushed XRP’s price 10% higher, underscoring the growing demand for institutional-grade investment vehicles tied to the asset.
The ETP, which trades under the ticker GXRP on Germany’s Deutsche Börse XETRA, offers European investors direct exposure to XRP through a 100% physically backed structure. Ripple CEO Brad Garlinghouse noted that the growing global interest in crypto-backed financial products aligns with improved U.S. regulatory clarity.
Cautious Optimism Amid Rising Metrics
Despite the recent bullish momentum, the combination of elevated profit-taking and the soaring MVRV ratio could signal a cooling-off period for XRP. Past patterns suggest that when MVRV ratios spike to such levels, market pullbacks often follow as traders consolidate gains.
While XRP remains up over 30% for the week, the token’s next moves will depend on whether it can sustain its upward momentum amid broader market dynamics. Investors may need to prepare for a potential correction as the market recalibrates after this latest surge.
