Ripple’s XRP shows signs of improving risk-adjusted returns, according to recent on-chain analytics. The Sharpe Ratio, a key measure of returns relative to volatility, has climbed back into positive territory after a steep decline in February. This suggests the asset could be generating more gains with less risk, though increased buyer demand is needed to sustain a recovery amid ongoing market corrections.
The risk-adjusted returns could be improving for Ripple [XRP], data showed. A rising Sharpe Ratio would imply a better risk-adjusted performance, as observed an analyst in a post on CryptoQuant Insights.
The metric saw a deep decline in February as the early January rally faded into a deeper downtrend. At that time, a Bitcoin [BTC] and crypto market-wide sell-off forced XRP prices from $2.35 to $1.21.
Recently, the Sharpe Ratio has improved gradually and has been hovering around the positive territory with a reading of 0.0267. A sustained increase would mean that XRP is generating more gains with less volatility and could set the stage for a gradual bullish recovery.
To keep the risk-adjusted returns rising, XRP needs increased demand which drives a sustained uptrend. The Taker Buy-Sell Ratio was examined to understand the buyer aggression.
In mid-March, when XRP rallied to $1.54, the taker buy orders were prevalent. This impetus didn’t last long, as over the past ten days the crypto market correction saw sellers take the upper hand once again.
Additionally, the estimated leverage ratio has seen an uptick lately. It signaled increased risk appetite from speculative traders while also warning of an increased threat of a hunt for liquidations and associated price volatility.
