XRP’s annual market value to realised value (MVRV) ratio has fallen below 1, flashing a bottom signal, but an analysis said a large buildup of tokens on exchanges could curb any near-term rebound.

CryptoSlate reported on Oct. 21 that XRP’s 365-day MVRV ratio fell to about 0.92 on the day, with XRP trading around $1.33.

The figure means holders who bought XRP over the past year have, on average, entered a zone of about 8 percent losses versus their cost basis. On-chain analytics firm Santiment viewed such levels as a point where selling pressure can typically ease. When prices fall below holders’ average purchase price, incentives to sell shrink and expectations for bargain buying can revive.

Still, a rebound is not easy to be optimistic about immediately. XRP supply waiting on exchanges totals $15.7 billion, leaving an overhang that could turn into selling pressure during any recovery phase. Even if a bottom signal is confirmed, upside momentum could be limited unless the supply sitting in the market is cleared.

Derivatives market moves were also cited as a burden. Glassnode warned that more than 40 percent of major altcoins are near annual leverage peaks. That means small moves in a price-sensitive zone could trigger cascading liquidations.

XRP derivatives data are being read in line with that caution. While a trend of reducing leverage has emerged on Binance, exchange supply in the spot market remains a burden. On one hand, widening holder losses are read as a bottom signal. On the other, queued supply and the process of deleveraging can slow the pace of any rebound.

The market is focused on 2 points. One is whether the 0.92 MVRV level will actually create seller fatigue and support the lower end of prices. At the same time, unless the $15.7 billion of exchange supply declines, any rebound attempt is likely to run into supply overhang.

In this situation, XRP is assessed as an asset showing both a bottom signal and resistance from overhead supply at the same time. Entering an average loss zone typically suggests the possibility of a reversal, but with leverage burdens persisting across major altcoins, whether XRP recovers depends on the digestion of exchange-held supply and stability in the derivatives market.