The recent rise of XRP above $3 has pushed 94% of its circulating supply into profit, raising concerns about potential market corrections.
94% XRP in Profit: History Repeats
According to Glassnode data, as of Sunday, 93.92% of XRP is in profit, indicating strong investor gains. In the past nine months, XRP has surged over 500%, rising from under $0.40 to $3.11.
Such high profitability levels have historically signaled overheated market conditions. For instance, in early 2018, more than 90% of holders were in profit when XRP peaked near $3.30, followed by a 95% price correction. A similar setup was observed in April 2021 when profitability levels above 90% preceded an 85% crash.
NUPL and Its Risks
The Net Unrealized Profit/Loss (NUPL) indicator is also signaling potential top risks. This indicator tracks the difference between unrealized gains and losses and has entered the ‘belief–denial’ zone, a phase historically observed before or during market tops.
In late 2017, XRP’s NUPL reached similar levels just before the price peak above $3.30, and a comparable pattern unfolded in April 2021 when NUPL readings above 0.5 coincided with XRP’s top near $1.95 before a sharp downturn.
Bullish or Bearish Scenario for XRP?
XRP price is consolidating inside a descending triangle after rising above $3. The bearish pattern is defined by lower highs against horizontal support near $3.05. If XRP breaks below this support, a sell-off could occur towards $2.39 by September, which is about 23.5% lower than current price levels.
On the other hand, bulls need to break above the descending resistance line to regain upside momentum and invalidate the bearish setup.
In summary, given the current profit metrics and market dynamics, caution is warranted as the risks of correction remain high.
