Activity on Ripple network reaches critical levels

The recent on-chain data indicates the rapid growth in Ripple’s users’ activity, implying the higher likelihood of increased XRP volatility in the following days.

XRP Trading Volume Anomaly

Despite demonstrating comparative stability in previous weeks, the unexpected trading volume surge occurred at the end of the week. According to the blockchain analytics company Santiment, the trading volume reached 18.7 billion XRP per hour being one of the highest levels reached within the past few months. The historical data indicates the high likelihood of serious price fluctuations following such a rapid growth in users’ activity, although the exact direction of future changes still remains uncertain.

On the one hand, the high trading volume in late June preceded the subsequent appreciation of XRP against the USD and the major cryptocurrencies in the following days. In contrast, the high trading volume observed in June, 8th–9th largely contributed to the significant XRP correction the following week. The major reason for such volatility is that a considerable amount of transactions can provide a serious impulse that will support either bullish or bearish expectations for the following days. In this manner, the major support or resistance levels can also be successfully overcome.

XRP Price Potential

Despite high volatility, Ripple demonstrates a satisfactory capitalization dynamic within the past 7 days. Thus, it has appreciated by 2.8% during the current week, while only Solana and Ethereum have been able to grow more rapidly among the Top-10 cryptocurrencies. At the same time, Ripple still experiences significant negative effects of the crypto winter as its market price declined from $1.40 reached in September of 2021 to the current level of $0.35. Thus, XRP declined by about 75% as compared with the maximum of this crypto cycle.

Technical analysis may be used to determine the major support and resistance levels that may increase the likelihood of price movements in specific directions. The timeframe of one month is especially informative in this regard as it includes several such levels proven to be effective in predicting and affecting the patterns of price changes over the past few weeks. This price trajectory also confirms the increased volatility and the high likelihood of new fluctuations in the near future.

Figure 1. XRP/USD Price Dynamics (1-Month); Data Source – CoinGecko

At the present moment, the major support level is observed at the price level of $0.305 that successfully served as the major prevention of further price decline on several occasions. At the same time, the two major resistance levels appear to be significant for rejecting the major bullish sentiments. The first one is at the price of $0.36 that is currently approached by XRP. The second one is at the level of $0.38 that may determine the likelihood of further price restoration with the possibility of testing the maximums of the past few months. Considering the impact of a high trading volume, the successful break of the first resistance level makes it reasonable to open long positions, targeting the one-month maximum.

Major External Factors

In addition to Ripple’s on-chain data, some external factors will directly affect its market positions in the short run. First, any explicit remarks on the future changes in Federal Reserve’s monetary policy may affect the demand for risky assets, including Ripple. If the aggressive tightening of the money supply continues, Ripple’s depreciation becomes more likely. At the same time, some interest rate changes are already priced in, implying that the crypto reflects not only the current monetary pressure but also the major expectations and experts’ consensus. Therefore, the major XRP price decline may be possible only in case the actual interest rate increase is higher than expected by the majority of traders.

Second, the general situation in the crypto market, including the BTC price action, may largely affect the most likely scenario for Ripple. XRP appreciation may become possible if BTC successfully holds the key support level. Otherwise, bears may increase their pressure targeting the levels below $0.30 for Ripple. Thus, complex market analysis is obligatory in this regard, and stop losses should be used to maintain the proper degree of financial stability. At the same time, risk-positive investors may also successfully utilize the major trading signals that indicate the high likelihood of considerable price fluctuations in the following days.


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