XRP On Edge: Supply Hits Historical High-Risk Levels, Brace For Impact?

Keshav Verma

1 year ago

3 mins read

Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Created by industry experts and meticulously reviewed

The highest standards in reporting and publishing

How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

Ad discliamer

Morbi pretium leo et nisl aliquam mollis. Quisque arcu lorem, ultricies quis pellentesque nec, ullamcorper eu odio.

Data shows the XRP supply in profit is currently at levels that have historically put the cryptocurrency’s price in a high-risk zone.

XRP, Bitcoin, And Ethereum Are All In High-Risk Zone Right Now

According to data from the on-chain analytics firm Santiment, Bitcoin, Ethereum, and XRP are assets that may be in a high-risk zone currently when compared to their historical averages.

The indicator of interest here is the “Percent of Total Supply in Profit,” which, as its name suggests, tracks the percentage of the total circulating supply of any cryptocurrency with some unrealized profit.

This metric works by going through the transaction history of each coin in circulation to see what price it was last transferred on the blockchain. Assuming that the last movement of any coin was changing hands (that is, a new holder bought it), this last transfer price would naturally reveal its profit-loss status.

If this previous price for any coin was less than the current spot value of the asset, then that particular coin can be considered to be in profit at the moment. The Percent of Total Supply in Profit adds up all such green coins and calculates what percentage of the supply they make up for.

Now, here is a chart that shows the trend in the Percent of Total Supply in Profit for Bitcoin, Ethereum, and XRP over the past few years:

Looks like the metric's value has been quite high for all of these three assets in recent days | Source: Santiment on X

As displayed in the above graph, the Percent of Total Supply in Profit has recently been at relatively high levels for all three of these assets. At present, 81% of the XRP supply is in the green, while the metric’s value is 83% and 84% in the case of Bitcoin and Ethereum, respectively.

Generally, the investors holding their coins at a profit are more likely to participate in selling, as the allure of profit-taking can be overwhelming. As such, the more holders there are in profit (or, the more supply is in profit), the more likely it is for a mass selloff to take place for the cryptocurrency.

Based on this relationship between the Percent Supply in Profit and the prices of the various assets, Santiment has defined three zones for the indicator, as the chart highlights.

Since 2018, XRP, BTC, and ETH have hovered between an average of 55% to 75% supply in profit. The assets are currently above this range, so they may be considered inside the high-risk zone.

“Crypto can absolutely still climb due to more exposure from ETFs and other positive news, explains the analytics firm. “But ideally, a great signal to watch that would imply continued long-term growth would be a breach below 75% of their supplies in profit once again.”

XRP Price

XRP has been unable to recover from its crash near the start of the month, as its price is still trading around $0.56. And given the current still-high supply in profit, the pain might only grow deeper for the asset’s holders soon.

The price of the coin has been sliding off in the last few days | Source: XRPUSD on TradingView

Featured image from Shutterstock.com, charts from TradingView.com, Santiment.net

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.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.