XRP Falling MDIA Signals Potential Price Appreciation for Long-Term Holders

XRP falling mean dollar invested age (MDIA) suggests increased network activity, providing bullish hope for long-term holders, despite recent price dips and consolidation phase

Ripple native cryptocurrency, XRP, has recently seen a series of interesting on-chain movements, particularly involving whales and long-term holders. Last week, XRP saw heightened whale activity, with holders possessing over $5 million in tokens now owning 55% of the total supply. Such a high concentration of tokens among whales often leads to significant price swings, as witnessed in the 12% price drop on July 10, 2023.

While XRP’s price has been consolidating in recent months, struggling to surpass the $0.7 mark since August 2023, on-chain metrics have revealed increased selling pressure from short-term holders. However, for long-term holders, there’s a glimmer of hope as key metrics such as dormant circulation and the mean dollar invested age (MDIA) are showing signs of positive movement.

Dormant Circulation and Price Movement
On September 2, 2024, XRP saw a major spike in dormant circulation, indicating a surge in address activity. Such surges usually precede price corrections, and XRP experienced a 12.18% drop within just four days, falling from $0.572 to $0.502. This correction aligns with similar movements seen earlier in June 2023.

Despite these price corrections, Ripple’s development activity remains strong, although it lags behind other large-cap cryptocurrencies like Cardano. Moreover, daily active addresses for XRP have remained relatively stable over the past six weeks, suggesting that short-term volatility has not significantly impacted overall network participation.

Assessing Capital Flow
The estimated leverage ratio for XRP spiked in mid-July but has since calmed, indicating that speculators are currently hesitant to enter new margin positions. This trend further supports the view that XRP is undergoing a consolidation phase, waiting for the next breakout.

More importantly, the mean coin age, a metric that tracks the average age of tokens, saw a sharp decline in September. This aligns with the spike in dormant circulation, suggesting increased token distribution during this period. However, in recent weeks, the mean coin age has started to trend upwards, indicating that distribution has slowed, and long-term holders are becoming more optimistic.

Falling MDIA and its Implications
Perhaps the most promising indicator for long-term holders is the rapid decrease in XRP’s mean dollar invested age (MDIA). The MDIA measures how long investments have remained inactive in wallets. A rising MDIA signals stagnation, while a falling MDIA suggests that previously dormant tokens are now moving, often a precursor to price appreciation.

As XRP’s MDIA continues its downward trend, it implies that investments are flowing back into circulation, signaling renewed network activity and potentially paving the way for an upward price move. This increased activity may also suggest that investors are regaining confidence in XRP, despite its recent consolidation.

Conclusion
XRP’s current on-chain metrics suggest that the cryptocurrency is in a consolidation phase, with both short-term and long-term investors exhibiting different behaviors. While short-term holders may have contributed to the recent price corrections, long-term holders could find hope in the falling MDIA, which hints at increased capital flow and network activity. If these trends continue, XRP could be gearing up for price appreciation, providing long-term holders with potential bullish momentum in the near future.

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