XRP cools from July highs as MVRV indicator flips bearish

XRP is showing signs of cooling off after its July rally, trading at $2.99 at press time, down nearly 17% from its July 18 all-time high of $3.65.

Despite a 6.2% increase over the last day, XRP (XRP) is still 7% lower for the week, indicating short-term volatility. An on-chain signal that may indicate additional declines coincides with this pullback.

XRP MVRV ratio flips bearish

On Aug. 4, crypto analyst Ali Martinez posted that the Market Value to Realized Value ratio for XRP had formed a death cross, a bearish signal that often precedes deeper corrections. The MVRV ratio compares a token’s current market cap to the average value of all tokens at the time they last moved on-chain. 

When this ratio falls, it suggests holders are moving into loss territory, which can trigger selling pressure. When a short-term MVRV trend crosses below a longer-term one, it is referred to as a “death cross” and is usually seen as an indication that momentum has shifted to the downside.

XRP trading volume slows, derivatives show mixed sentiment

The recent price movement of XRP has been accompanied by a decline in trading volume. Volume fell more than 23% to $4.83 billion on the last day, a sign of declining spot interest. According to Coinglass data, open interest increased by 2% to $7.33 billion, while volume in the derivatives market dropped 34% to $8.06 billion.

Declining volume and rising open interest may indicate that traders are holding positions rather than actively trading, which would reflect market caution.

Technical indicators suggest a cautious outlook

XRP is positioned just below important short-term moving averages, with both the 10-day EMA at $3.02 and the 20-day EMA at $3.01 flashing “sell” signals. At 51.29, the relative strength index is in neutral territory and does not provide a clear indication of direction. A short-term bounce may be possible as the Stochastic RSI is close to 14, indicating that the token is approaching an oversold zone.

Longer-term moving averages continue to back a more general upward trend. Both the 50-day and 200-day EMAs show underlying strength at $2.79 and $2.34, respectively. Before trying to regain the $3.20 resistance level, XRP might consolidate if it stays above $2.95. The next support zone, which is around $2.50, could be tested if the price breaks below $2.75.

With the MVRV death cross now in play, market participants will be closely watching whether buyers can defend key support levels or if XRP is set for a deeper correction in the coming days.