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Since XRP Ledger has only processed 114.07 million XRP in payments volume over the past 24 hours, XRP has officially fallen out of the 100 million-payment-volume club.
Utility driving XRP?
Compared to recent weeks, when daily transaction volumes easily hovered above the 200-300 million mark and occasionally even approached the 2 billion mark, this represents a significant drop. A drop of this magnitude reveals possible weaknesses in XRP's utility-driven storyline and may have long-term effects on the asset's place on the cryptocurrency market.
The XRP Ledger has consistently been promoted as a blockchain with a payments focus, intended to enable quick, scalable and inexpensive cross-border transfers. XRP's main growth engine is not DeFi, NFTs or smart contracts, as with Ethereum or Solana. Because of this, the most important indicator for evaluating the network's health is the volume of payments.
It is unclear whether Ripples collaborations and institutional adoption initiatives are actually maintaining significant activity, if the number falls below 100 million, indicating a decline in demand for on-chain transfers.
On-chain demand declines
At the moment, XRP is trading beneath a descending trendline that has restrained growth since its strong summer rally, and it is consolidating around $2.97. On the daily chart, XRP is trapped between resistance just below $3.10 and the 50-day EMA around $2.92. XRP might move into more bullish territory if it breaks above this line, but the absence of a corresponding increase in payment volumes raises the possibility that any rally may not have fundamental support.
Reflecting neutral momentum, the RSI is in the middle of the range at about 55. However, there is an overhang caused by the decreasing on-chain volume, which might damage new capital inflows. Price action may remain unchanged or even experience downward pressure, even though technical support zones are currently holding, if network activity does not improve.
XRP's exit from the 100 million payments club is more of a short-term on-chain signal. Because transaction volume, the networks lifeblood, seems to be dwindling, it is important to remain cautious about every new rally originating on the market right now.
Dan Burgin
Vladislav Sopov
U.Today Editorial Team