XRP Forms On-Chain Signal That Led To 16% Crash Last Time

Keshav Verma

1 year ago

3 mins read

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On-chain data shows that many old coins have moved on the XRP network recently, a sign that proved to be bearish for the coin last time.

XRP Age Consumed Metric Has Registered A Large Spike

According to data from the on-chain analytics firm Santiment, XRP has just observed a large movement of dormant coins similar to what the asset witnessed last month.

The indicator of interest here is the “Age Consumed,” which shows “the amount of tokens changing addresses on a certain date, multiplied by the time since they last moved,” as per Santiment’s definition.

When this metric has a high value, it means that a large number of coins previously dormant have finally been moved to the blockchain. Old coins are generally less likely to become involved in selling, as they belong to the more resolute hands in the market. As such, any large movements of these coins can be worth noting since it’s not an event that happens too often.

The below chart shows the trend in this indicator for XRP over the past month or so:

The value of the metric seems to have been quite high in recent days | Source: Santiment on X

From the graph, it’s visible that the XRP Age Consumed registered a sharp spike at the start of this month, implying that some old hands have decided to break their silence.

This latest spike has been quite massive in scale and has been reminiscent of another spike that was seen last month. Interestingly, this previous spike occurred shortly before the price of the cryptocurrency tanked 16%.

Thus, the previous spike would have corresponded to some HODLers moving to sell their coins. It’s possible that the latest large dormant coin movement was also made for a similar purpose, and hence, it can prove to be bearish for XRP.

Santiment points out that this may not be so after all, though, saying:

There is an argument that this old coin movement is related to potential #buythedip interest from key stakeholders, and prices have been climbing mildly since this May spike occurred.

While this dormant coin movement may turn out to be bullish this time around, there is another signal brewing for the asset that can also be something to keep an eye on.

As highlighted in the same chart, the Total Open Interest for XRP, which keeps track of the number of derivative positions currently open on all exchanges related to the asset, has been going up recently.

This metric is now at a 3-week high of $483.4 million, implying that there is a notable amount of speculation in the market right now. Historically, this has led to volatility in the price.

In theory, this volatility can take the asset in either direction, but it’s worth noting that the crash last month occurred after the Open Interest hit extreme levels. So far, though, the indicator hasn’t quite yet reached the same highs.

XRP Price

XRP is yet to make any significant recovery from the crash last month as its price is still trading around $0.52.

Looks like the price of the asset has been overall moving sideways since the plunge | Source: XRPUSD on TradingView

Featured image from Kanchanara on Unsplash.com, Santiment.net, chart from TradingView.com

Keshav Verma

Keshav is currently a senior writer at NewsBTC and has been attached to the website since June 14, 2021.

Keshav has been writing for many years, first as a hobbyist and later as a freelancer. He has experience working in a variety of niches, even fiction at one point, but the cryptocurrency industry has been the longest he has been attached to.

In terms of official educational qualifications, Keshav holds a bachelor’s degree in Physics from one of the premier institutes of India, the University of Delhi (DU). He started the degree with an aim of eventually making a career in Physics, but the onset of COVID led to a shift in plans. The virus meant that the college classes had to be delivered in the online-mode and with it came free time for him to explore other passions.

Initially only seeking to make some beer money, Keshav unexpectedly landed clients offering real projects, after which there was no looking back. Writing was something he had always enjoyed and to be able to do it for a living was like a dream come true.

Keshav completed his Physics degree in 2022 and has been focusing on his writing career since, but that doesn’t mean his passion for Physics has ended. He eventually plans to re-enter university to obtain a masters degree in the same field, but perhaps only to satiate his own interest rather than for using it as a means to find employment..

Keshav has found blockchain and its concepts fascinating ever since he started going down the rabbit-hole back in 2020. On-chain analysis in particular has been something he likes to research more about, which is why his NewsBTC pieces tend to involve it in some form.

Being of the science background, Keshav likes if concepts are clear and consistent, so he generally explains the indicators he talks about in a bit of detail so that the readers can perhaps come out having understood and learnt something new.

As for hobbies, Keshav is super into football, anime, and videogames. He enjoys football not only as a watcher, but also as a player. For games, Keshav generally tends towards enjoying singleplayer adventures, with EA FC (formerly FIFA) being the only online game he is active in. Though, perhaps due to being ultra-focused on the game, he is today a semi-pro on the EA FC scene, regularly participating in tournaments and sometimes even taking back prize money.

Because of his enthusiasm for anime and games, he also self-learned Japanese along the way to consume some of the untranslated gems out there. The skill didn’t merely remain as just a hobby, either, as he put it to productive use during his exploration for small-time gigs at the start of COVID, fulfilling a couple of Japanese-to-English translation jobs.

Keshav is also big into fitness, with agility and acceleration-related workouts making a big part of his program due to the relevance they have in football. On top of that, he also has a more traditional strength based program for the gym, which he does to maintain an overall fitness level of his body.

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