Ripple’s XRP coin has tumbled by 7.8% over the past week, showing weak price action for the digital asset as the wider crypto market reels under global macroeconomic uncertainty. Despite this, the latest data from Binance exchange shows that demand for the cryptocurrency is holding despite the lukewarm price momentum.
XRP demand is strong despite weak price action
According to a CryptoQuant post by analyst Arab Chain, the current value of the 30-day price-Cumulative Volume Delta (CVD) correlation is around 0.61, indicating a moderate to strong positive relationship between XRP’s price and net volume flows.
To explain, an asset’s CVD tracks the net difference between buying and selling volume over time by deducting sell volume from buy volume. Traders typically use CVD to determine whether real demand or selling pressure is driving price movements. This helps them identify market strength, confirmations, or potential divergences.
The 0.61 correlation number shows that XRP’s recent price movements haven’t completely decoupled from its volume behavior but are rather supported by it. Such a degree of correlation is often considered a proof of structural confirmation instead of a trend reversal.
On the contrary, the latest CVD reading continues to be slightly in the negative territory, hinting that accumulated selling pressure has not completely transitioned into net buying dominance.
This particular characteristic of CVD is what makes it a ‘score’ instead of a ‘signal’, since it does not provide an entry trigger but rather evaluates the quality of the prevailing market trend.
The importance of the CVD score
CVD can help traders identify market divergence. If the XRP price surges further despite the deteriorating correlation or negative CVD, then it would confirm underlying weakness in price.
However, the market currently shows a positive correlation of 0.61, despite ongoing price weakness. This shows that the market may be laying the foundation for an upcoming rally to the upside, instead of an aggressive distribution phase.
From a technical analysis standpoint, things look positive for XRP. For instance, crypto analyst Austin shared the following chart, which predicts that XRP may be on the cusp of a parabolic rally, which could propel the coin’s price to as high as $270.
Recent exchange data shows that XRP whale inflows to Binance recently reached their lowest level since 2021, a sign of weak selling pressure for the digital asset. Similarly, the cryptocurrency’s funding rate recently turned negative, hinting at a possible bullish reversal.
