On-chain data shows that XRP traders have been selling at a loss recently, unlike investors of the other top assets. Here’s why this can be bullish for the coin.
XRP Loss Transactions Have Outweighed Profit Ones Recently
According to data from the on-chain analytics firm Santiment, XRP has differed from the rest of the top cryptocurrencies in terms of the loss-taking behavior of the investors. The relevant indicator here is the “ratio of on-chain transaction volume in profit to loss,” which, as its name already hints, tells us about how the profit-taking volume of a specific coin compares with the loss-taking volume.
This metric separates these two volumes by going through the chain history of each coin being transacted to see what price it was previously moved at. If this previous selling price for any coin was less than the current spot value, then that particular coin is now being sold at a profit.
Naturally, all such coins will contribute towards the profit-taking volume. On the other hand, the coins of the opposite case will add to the loss-taking volume.
Now, here is a chart that shows the trend in this ratio for some of the top assets in the sector over the last few months:
Looks like the value of the metric has been positive for most of the coins | Source: Santiment on Twitter
As displayed in the above graph, the indicator has recently had positive values for Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and Cardano (ADA). Whenever the metric has such green values, it means that the profit-taking volume is more than the loss-taking volume currently.
This profit-taking spree from the investors of these cryptocurrencies isn’t unexpected, as the prices of the various assets have observed a significant uplift during the past week. Following such sharp rallies, at least some holders tend to harvest their gains.
The odd one out here is XRP, however. From the graph, it’s visible that the metric has turned negative for the asset recently, implying that the investors have been participating in a net amount of loss-taking.
The reason behind these holders selling at a loss would be the poor performance of the coin relative to the other top assets, as XRP has in fact registered a decline of 1% during the past week.
Usually, loss-taking is a sign that the investors of the asset have started to give up, as they likely believe that the coin would only see a further downtrend in the near future.
Such capitulation, however, has historically actually been bullish for the cryptocurrency’s price, as weak hands exit the coin during these events, while stronger hands buy up their tokens.
The deeper the investors capitulate, the more likely a rise in the price becomes. The XRP investors, though, have only been participating in a slight amount of loss-taking recently. But nonetheless, it’s still a bullish sign for the asset, even if not a particularly major one.
XRP Price
At the time of writing, XRP is trading around $0.48, down 1% in the last week.
XRP continues to consolidate | Source: XRPUSD on TradingView