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XRP Ledger's on-chain activity has fallen 90% from its recent peak, posing concerns about the network's usage and overall health, putting XRP in a precarious position. The volume of payments and transactions on XRP Ledger has virtually vanished despite the fact that XRP has managed to stay between $2.30 and $2.40. This is a concerning indication that speculative interest is significantly outpacing actual usage. This change in sentiment is technically reflected in the price action of XRP.
In early May, XRP showed promise by breaking out of a descending wedge pattern, but it has since been trapped in a tightening consolidation. At $2.30 the price is testing a support zone that also happens to be the 100-day EMA. The 200 EMA (black line) indicates the next area of interest is located around $2.20. The entire bullish setup of the previous two months could be undone if there was a slip below that, which would put $2.05 into play.
Although it is not yet oversold, the Relative Strength Index (RSI) has fallen to the mid-50s, indicating that momentum has slowed. Additionally, volume has significantly decreased, highlighting the possibility of a further decline if support breaks. What is causing the decline in XRPL activity? Analysts cite a number of reasons, including a halt in speculative trading volumes, decreased institutional usage as a result of ongoing regulatory uncertainty and the dominance of Bitcoin (with BTC at elevated levels) suckling liquidity away from altcoins like XRP.
The ledger's payment volume charts demonstrate a sharp drop, which could be attributed to either a lull in retail demand or decreased enterprise usage — two factors that are essential to XRP's central story as a payments token. Investors should now keep a careful eye on the $2.20 and $2.30 support zones.
XRP might retest the $2.50 breakout point if it bounces from these levels, but a breakdown would expose it to a much deeper retracement. Since 90% of its usage volume has been used up, XRP must demonstrate that it can spark real-world transactions again, if not, price action might soon follow the on-chain trend.
Vladislav Sopov
U.Today Editorial Team