XRP price appears to be at risk of a significant retreat, as several on-chain indicators point toward a possible local top. With a large majority of XRP holders currently in profit, analysts are closely watching potential warning signs that the rally may be running out of steam.

According to data from crypto intelligence firm Santiment, approximately 94% of XRP wallets are in a profitable position. This unusually high metric suggests growing odds of investors taking profits, which could lead to increased selling pressure in the days ahead.

A key contributor to this assessment is the Market Value to Realized Value (MVRV) ratio. Currently, XRP’s MVRV ratio stands at over 1, a level that historically signals the token is in overvalued territory. When the MVRV ratio is elevated, it often indicates an overheated market condition, as it means the asset is trading significantly above the average cost basis of its holders.

Additionally, liquidity metrics reveal that there’s roughly $176.74 million worth of XRP ready to be withdrawn from decentralized exchanges at the $0.73 level. This cluster of potential exit points could serve as a psychological resistance zone, further dampening near-term momentum.

These on-chain signals come amid mixed performance in the broader crypto market. While many altcoins have recently shown strong gains, XRP has lagged behind some of its peers. Traders are now contemplating whether the asset’s current valuation has reached a temporary peak or if more upside remains achievable.

Moreover, technical analysis of the XRP/USD trading pair shows a rising wedge pattern on the daily chart. This type of formation often precedes bearish breakdowns, depending on follow-through volume and market sentiment. If confirmed, this pattern could result in a retracement targeting the $0.57–$0.58 support zone, representing a decline of about 20% from current levels.

Despite these bearish setups, enthusiasm within the XRP community remains strong, particularly in light of Ripple’s ongoing legal progress with the U.S. Securities and Exchange Commission (SEC). Many investors continue to believe in long-term growth prospects tied to Ripple’s business operations and eventual regulatory clarity.

XRP’s recent rally could face a pullback as more holders consider taking profits.

Nevertheless, the current market dynamics suggest that caution may be warranted. High profitability among holders, technical warning patterns, and significant resistance near current price levels all contribute to the scenario for a short-term price correction.

Related: XRP Price: $12M Max Pain for Bears

Investors should watch closely for confirmations of either continued strength or breakdown in XRP’s price action. As always, risk management remains critical in such volatile environments.