This is why the price of XRP may not surpass the 3-month-old channel.

XRP has recently faced a downward trend, with this altcoin falling below key support levels. However, it seems to have established a bullish pattern that appears ready for a breakout. However, the high valuation of XRP has made this breakthrough difficult to achieve. As the price of this altcoin skyrockets, concerns about its sustainability are increasing. XRP is overvalued This week, the network value to transaction ratio of XRP surged to a five-year high at (NVT), signaling overvaluation. The NVT ratio is an important indicator that compares the market capitalization of a cryptocurrency to its transaction volume. When the NVT ratio rises sharply, it indicates that the network value is far exceeding actual trading activity. This situation historically relates to the upcoming price correction. The last time the NVT ratio reached a similar level was in January 2020, just before XRP experienced a significant downturn. The increase in NVT indicates that the market is becoming overheated, with expectations of a cooldown.

Although XRP has risen 22% in the past two weeks, technical indicators paint a more concerning picture. The Chaikin Money Flow (CMF) indicator has shown a significant increase, often indicating that money is flowing into the market. However, upon closer examination of the volume of money flowing in, we see that significant buying activity does not support the bullish movement. Instead, the hype and speculation driving prices higher is the real interest of investors. With this, the bullish phase of XRP may be more of a short-term anomaly rather than a sustainable upward trend. As the market cools down and the frenzy subsides, this altcoin may struggle to maintain its recent price. The overvaluation remains a significant risk, potentially leading to a price adjustment.

The price of XRP faces bearish signals. XRP is currently trading at $2.19, showing a 22% increase over the past two weeks. This altcoin appears to be preparing for a breakout from a three-month downward trend channel. However, this breakout is facing challenges, as overvaluation and broader market indicators suggest that the bullish trend may not last. With potential bearish factors, even if XRP can break out, the bullish trend may only last for a short time. The price may fall to $2.02 or may drop to $1.94 if the breakout does not hold. The combination of overvaluation and weak buying momentum can quickly reverse any gains.

On the other hand, if XRP can truly sustain its breakout, maintaining the support levels of $2.40 and $2.56 could provide the necessary foundation for further price growth. Such a move would invalidate the downward trend outlook, allowing XRP to rise higher and continue to increase.