XRP has staged a remarkable rally, surging over 500% in the last nine months to break the significant $3.00 barrier. This impressive performance has rewarded long-term holders, pushing a vast majority of the cryptocurrency’s circulating supply into a profitable position. However, a closer look at on-chain data and technical charts reveals that this widespread profitability may be a double-edged sword, signaling that the market could be overheating.
A Sea of Green: 94% of XRP Supply Now in Profit
According to data from the on-chain analytics firm Glass node, as of this past Sunday, a staggering 93.92% of the circulating XRP supply is in a state of profit. While this underscores the strong gains investors have enjoyed, it also places the asset in a historically precarious zone.
History shows that when over 90% of the XRP supply is in profit, it often coincides with a market top. This pattern has played out twice before with dramatic consequences:
Early 2018: Profitability levels exceeded 90% just as XRP peaked near its all-time high of $3.30. What followed was a devastating 95% price reversal.
April 2021: A similar scenario unfolded when over 90% of the supply was in the green. XRP hit a local top near $1.95 before crashing by 85%.
Such high profitability significantly increases the risk of distribution, a phase where long-term holders and savvy traders begin to sell their assets to realize their gains. This selling pressure can quickly overwhelm buying demand, leading to a sharp correction.
NUPL Indicator Echoes Past Peaks
Further compounding these concerns is another key on-chain metric: the Net Unrealized Profit/Loss (NUPL). This indicator, which measures the overall network’s profitability, has entered the “belief–denial” zone. This phase is historically observed just before or during significant market peaks, as investor sentiment shifts from confidence to the early stages of disbelief that the rally can continue.
Once again, the parallels to past cycles are clear. In late 2017 and April 2021, XRP’s NUPL spiked to similar levels right as its price reached a major top. While the current trajectory suggests investors are not yet in full “euphoria,” the risk of profit-taking will intensify if the NUPL continues to climb.
For XRP to absorb this potential selling pressure, it would need to attract significant fresh capital, likely driven by new institutional demand or a powerful, market-wide altcoin momentum.
The Technical Picture: A Classic Bearish Pattern Forms
On the price chart, XRP is consolidating within a descending triangle pattern after its move above $3. This formation is typically considered bearish and is characterized by a series of lower highs pressing down on a horizontal support level, currently near $3.05.
While XRP briefly faked a breakdown below this support earlier this month before rebounding, the repeated tests of this level are weakening it. A confirmed and decisive break below the 2.39**, representing a drop of over 20% from current levels.
For the bulls to regain control and invalidate this bearish setup, they must achieve a strong breakout above the descending trendline that forms the triangle’s resistance. A successful move could reignite upside momentum, with some optimistic traders eyeing a potential rally toward $6 in such a scenario.
In conclusion, while XRP’s price action has been impressive, investors should remain cautious. Multiple on-chain indicators are flashing warning signs that have historically preceded major corrections, and a bearish chart pattern is adding technical pressure. The key level to watch remains the $3.05 support—a break below could signal the start of a deeper correction, while a hold and breakout could keep the bullish dream alive.
