Is SXP (finally) in the danger zone?

The price of Swipe (SXP) hit a 5-month high $2.39 earlier today, on the back of a massive, +79.1% week. However, several on-chain indicators are now pointing to a potential short-term top and an increased risk of correction.

Particularly concerning is Swipe’s fast-rising exchange inflow, with more than 3.2M SXP (~$7.3M at the time of writing) moving to known exchange wallets in the past 12 hours:

The increased exchange-bound activity could point to a rising sell-side pressure, as some investors look to offload their bags and take profits. To that point, the amount of total SXP supply located on exchanges has seen a steady uptick throughout the week, with two previous supply peaks coinciding with local price tops:

Another metric suggesting interim profit-taking is Swipe’s Network Realized Profit/Loss (NPL for short), which tracks the total daily ROI across all network transactions.

The way NPL works is simple: for each unit of SXP that moves on the blockchain, we take the price at which it last moved and assume this to be its acquisition price. Once it changes addresses again, we assume this to be its sell price. As such, spikes in Swipe’s NPL suggest that the coins currently moving on the blockchain are - on average - being moved (or ‘sold’) at significant profit, and vice versa.

Since NPL basically assumes that all transactions on the blockchain are buys and sells, it has clear limitations and works better for some assets than others. That said, spikes in NPL - especially during strong price rallies - are more likely to be speculative and certainly warrant attention.

With that said, we’re currently seeing the largest NPL spike for Swipe since November 25th - which also proved to be a local top:

This is further supported by Swipe’s Age Consumed, which tracks the renewed activity of coins that haven’t moved on the blockchain for an extended period of time.

Again, Swipe’s age consumed mushroomed earlier today, suggesting that some long-term HODLers are now on the move. Combining this with the above spike in exchange inflow could point to short-term HODLer sell-offs, which might exert downward pressure on the coin’s PA:

The latest SXP rally has also had a clear impact on a few ‘valuation’ models using on-chain data. This is especially true with Swipe’s MVRV ratio, which tracks the average profit or loss of a certain group of addresses. For instance, Swipe’s 30-day MVRV ratio tracks the average P or L of all addresses that have acquired SXP in the past 30 days.

As a rule of thumb, the higher the MVRV ratio (meaning, the higher the average profits), the more likely it is that holders will begin to sell and exit their positions, and vice versa. At present, Swipe’s 30-day MVRV ratio hovers at +76.4%, the highest it’s been since August 18th:

The 365-day MVRV ratio paints a similar picture, both suggesting ‘overvalued’ conditions and the potential ‘danger zone’ for the coin according to the metric.

Finally, Swipe’s on-chain activity has shown a concerning divergence in the past 72 hours, with the amount of unique addresses interacting with SXP declining despite a strong uptrend in price:

This type of address-price divergence could suggest a declining speculative interest in the coin, and a lack of fundamental support for a sustained price rally. That said, on-chain activity typically dips over the weekend, so I’d keep an eye on this metric for a potential bounceback over the next 8-12 hours.

Overall, a number of SXP’s on-chain indicia suggest an increased risk of short-term price correction, so caution is advised. I suggest paying attention to the coin’s exchange activity as well as whale behavior in the coming days; consistent sell-offs paired with signs of whale exodus could mean an interim top has been formed.

Disclaimer: The opinions expressed in the post are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.