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The past two weeks have seen a sharp decline in payments activity, according to XRP on-chain data. According to metrics monitoring payment volume across XRP Ledger, transaction flows between accounts have decreased by almost 90% from their peak in early February, which is one of the most dramatic drops in network usage in recent memory.
Baseline returned
The volume of daily payments at the start of the period momentarily jumped into the multibillion-unit range, indicating a resurgence of network activity and a rise in utility demand. This momentum, though, was fleeting. Activity has gradually decreased since then, with payment volumes reverting to baseline levels and ultimately plummeting to a small portion of their most recent peaks.
Usually a sharp decline like this indicates declining transactional demand as opposed to merely transient volatility. Fewer transfers indicate less utility activity among exchange payment providers, and users interacting with the ledger as payments volume is frequently seen as a stand-in for actual network usage. The price action is also displaying this weakness.
Downtrend continues
On the daily chart, XRP is trading within a wider downward channel and has had difficulty establishing any kind of sustained recovery. Key moving averages have not been reclaimed despite recent attempts at a bounce; they are still sloping downward and supporting bearish pressure.
After recovering from recent lows, the asset is now trading close to a precarious support zone, but the recovery is still technically weak. Compared to previous sell-offs, the volume that accompanied recent upward moves has also been muted, indicating that buyers are being cautious rather than aggressively accumulating. XRP's reputation could worsen if payment activity does not quickly improve.
Long-term confidence is typically weakened by decreased network engagement, especially among institutional participants who keep a careful eye on utility metrics. It is not an irreversible matter, though. If exchange flows, remittance channels or liquidity providers resume regular operations, payment volumes can rapidly increase.
For now traders, should keep a close eye on both on-chain metrics and price structure. Restoring confidence could be indicated by a stabilization or recovery in payments activity, but ongoing weakness could indicate more downward pressure in the coming weeks.
Vladislav Sopov
Dan Burgin