Most recent spike in large transactions has nothing to do with poor performance of coin
Amid the decreasing volatility of the market and the slow recovery of netflow on the market, we are seeing some on-chain signs of recoveries. Nevertheless, traders should not make premature assumptions and, more importantly, not take any actions without receiving long-term signals.
XRP moves in uptrend against all odds
XRP’s path on the market has been controversial as the coin has failed to break out at least twice despite a variety of new information from the court. However, XRP has not retracted globally. Since Nov. 10, XRP has been rallying upward, despite the correction on the market.
Unfortunately, there’s a catch: the current uptrend exists in divergence with the volume. While moving upward, investors and traders are mostly moving funds away from the market, which is a signal of an upcoming trend fading.
The inability to break through the local resistance level is, for some traders, tied to the most recent flurry of massive transactions on the XRP network. More than 4 billion XRP have been transferred from exchanges to unknown wallets.
However, the massive migration of funds was not tied to any selling activities. XRP has been gradually moving downward due to the lack of growth fuel and the depressing state of the cryptocurrency market that has been showing negative netflows since the beginning of November.
As liquidity flows away from the digital assets industry, assets like XRP, Ethereum and others will continue to lose their value as investors sell their assets in exchange for stablecoins and other cryptocurrencies they can use to increase their liquidity and withdraw funds away from the troublesome industry.
Ethereum’s recovery potential emerges
Ethereum has not been having the best time after the network’s activity plunged to multi-month lows, causing a drop of issuance offset, making the second biggest cryptocurrency in the world inflationary again.
With the descending activity of the network, issuance increases and pushes the network’s value upward again. However, there is an indicator that shows reversal possibility.
📉 #Ethereum $ETH Number of Receiving Addresses (7d MA) just reached a 1-month low of 8,010.369
View metric:https://t.co/Vm6VJY2z37 pic.twitter.com/oXxANIDH85
— glassnode alerts (@glassnodealerts) December 8, 2022
In the last few days, Ethereum’s median gas usage has reached a one-month high, which is a preliminary sign of an upcoming recovery. As the gas consumption of the network increases, more fees are getting burned, decreasing issuance and making Ethereum more deflationary.
In terms of price performance, the network’s recovery should include a rise in activity and gas consumptions and should positively affect ETH’s value on the market — but only in the event of an overall recovery of the cryptocurrency market.
At press time, Ethereum is trading at $1,238 and gaining around 0.6% to its value in the last 24 hours.