XRP cools from July highs — Is the MVRV death cross a sign of more pain ahead?

$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.

$XRP cools from July highs — Is the MVRV death cross a sign of more pain ahead? - 1">

$XRP daily chart. Credit: crypto.news

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.