XRP Price Drops 30% After Donald Trump's Announcement

XRP's price climbed 30% on Sunday after President Donald Trump announced its inclusion as part of the coins that make up his proposed cryptocurrency reserve.

President Donald Trump's proposal to include cryptocurrency in the U.S. administration's balance sheet has sparked a surge in interest in the crypto market.

According to on-chain data from Santiment, this drove up the price of XRP, pushing it into overvalued territory. However, the surge was short-lived as a wave of profit-taking triggered a decline, pushing the altcoin back into undervalued levels.

According to the latest data, XRP's Market Value to Realized Value (MVRV) ratios assessed over multiple moving averages suggest that the altcoin is now undervalued. As of this writing, the token's seven-day and 30-day MVRV ratios stand at -6.85% and -6.36%, respectively.

An asset's MVRV ratio identifies whether it is overvalued or undervalued by measuring the relationship between its market value and its realized value. When an asset's MVRV ratio is positive, its market value is higher than the realized value, suggesting it is overvalued. However, as with XRP, when the ratio is negative, the asset's market value is lower than its realized value. This suggests that the coin is undervalued compared to what people originally paid for it.

As the adage goes, "everything is bearish when it can go lower, and everything is bullish when it cannot go lower," and to those looking to buy the dips and sell high, these negative MVRV ratios present an opportunity. Traders usually view such ratios as a signal to buy the asset at discounted prices and hold to sell when the market sees a resurgence in bullish pressure.

Moreover, despite XRP's price decline since Sunday's high, its funding rate remains positive, highlighting the optimism among its futures market participants. At press time, this is at 0.0004%.

The funding rate is the periodic payment exchanged between long and short traders in perpetual futures markets. It is designed to keep the price of a derivative close to the underlying asset. When the funding rate is positive, traders in the derivatives market are betting on upward price movement.

If market participants heed this buy signal and new demand enters the market, it could propel XRP toward resistance at $2.93. A successful breach of this level could cause XRP to reclaim its all-time high of $3.40, which was last reached on January 16.

On the flip side, if it maintains its current downtrend, XRP's price could fall to $2.13.