The second quarter's closure marked a bearish signal for XRP holders as dormant tokens surged in activity, hinting at potential distribution by long-term holders (LTHs). This movement often foreshadows price declines, raising questions about Q3's trajectory.
Key On-Chain Signals Point to Distribution
Spike in Dormant Circulation
Santiment’s data reveals XRP’s 90-day Dormant Circulation surged to 387.19 million tokens—a three-week high—indicating accelerated sell-offs by LTHs. Historically, such spikes precede downtrends as holders exit positions to lock in profits or mitigate losses.
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Rising Liveliness Metric
After a weeks-long decline, XRP’s Liveliness rebounded to 0.809, per Glassnode. This metric tracks long-held token movement:
- Declining Liveliness: HODLing behavior.
- Rising Liveliness: Profit-taking or panic selling.
Market Sentiment Turns Bearish
Balance of Power (BoP) Signals Seller Dominance
XRP’s daily BoP sits at -0.62, reflecting overwhelming sell-side pressure. Key levels to watch:
- Support: $2.08 (if bearish momentum continues).
- Resistance: $2.29 (contingent on demand resurgence).
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FAQs: Addressing Critical Questions
1. Why does dormant token movement matter?
When inactive coins suddenly circulate, it often indicates long-term holders redistributing supply, which can dilute prices if demand doesn’t match the influx.
2. How reliable is the Liveliness metric?
Liveliness is a proven indicator of holder behavior. Sharp increases correlate with heightened selling activity, as seen in past market cycles.
3. What’s the short-term outlook for XRP?
With BoP favoring sellers and dormant tokens flooding the market, downward pressure is likely unless bullish catalysts emerge.
Strategic Takeaways for Investors
- Monitor dormant circulation trends for early distribution signals.
- Watch BoP and Liveliness to gauge market sentiment shifts.
- Prepare for volatility near key support/resistance levels.
Disclaimer: This analysis is for informational purposes only. Conduct independent research and consult financial advisors before trading.