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XRP's Increased Network Activity Not Yet Followed By Price, Here's Why It Might Be Bullish

Wed, 10/27/2021 - 08:32
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Arman Shirinyan
Ripple investors might face increased volatility according to this on-chain metric
XRP's Increased Network Activity Not Yet Followed By Price, Here's Why It Might Be Bullish
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With Ripple remaining in consolidation for the past two weeks, Santiment has provided on-chain data that shows a significant divergence between price action and network activity, which is usually considered a volatility signal.

The network activity indicators are usually strongly correlated with the price of an asset. With the rapid increase of the asset's value, traders and investors tend to move their funds more for various reasons, including selling on exchanges, payments or redistribution.

The same rule applies to XRP. On the Network Activity/Price chart, we can clearly witness the movement order between the two metrics. The higher the network activity is, the greater the chance of volatile movements on the trading pair.

Santiment Chart
Source: Santiment

While the metrics might be useful in determining whether the market is going to face a volatility increase or not, it cannot be considered a directional indicator since it does not signal whether an asset will move in one or another direction.

Ripple is currently going through a wide array of events that may or may not affect its price positively or negatively. Since the SEC's actions against the company, the value of the coin has tripled, a positive sign for both the Ripple community and the crypto community in general.

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At press time, XRP is trading at $1 with continuous consolidation in the $1-$1.20 range. Network activity currently sits at an average of 52,000 active addresses.

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About the author

Arman Shirinyan is a trader, crypto enthusiast and SMM expert with more than four years of experience.

Arman strongly believes that cryptocurrencies and the blockchain will be of constant use in the future. Currently, he focuses on news, articles with deep analysis of crypto projects and technical analysis of cryptocurrency trading pairs.