The XRP network recently experienced a remarkable surge in on-chain transactions. An incredible 838 million XRP tokens are said to have been transferred between accounts in a single day. This registered an increase in network activity in the XRP ecosystem, and market participants have certainly noticed.
People have observed that such notable spikes in transaction volume on a blockchain network cause significant price movement for the asset.
Because of this correlation, many traders and investors are left to wonder whether this recent burst in XRP activity is a sign that the token—and possibly the cryptocurrency market as a whole—will sooner or later undergo a recovery. The increased fundamental use of the network often indicates strong underlying demand and utility, which can have substantial impacts on price movements.
Current Price Action and Technical Hurdles
As fascinating as the increase in on-chain activity is, it is not currently translating to consistent upward price action for XRP. For a while, XRP seemed to test the 100-day exponential moving average (EMA) and met substantial resistance. This point of resistance has resulted in the price settling into a range, known as consolidation, where prices move within a limited range and buying and selling activity create a temporary standoff.
Even with a lack of bullish price action, there is one remarkable positive technical indicator: the fact that XRP has managed to retain a crucial support zone of approximately $2.15. Despite the challenges, refusing to capitulate at this price level is a vote of confidence for bulls. The reality is that purchasers at this level are “fighting an uphill battle” to stop the drop but, to a certain extent, can push the price higher.
Understanding Volume and Outlook
The XRP ecosystem seems to be gaining more traction and activity based on the increased transaction volume. The increase in network activity of this magnitude on the XRP Ledger is often a good indicator of an increased demand for the XRP asset. Increasing demand, if consistent, will lead to more volatile price action, and if continued, the demand will trigger a bullish breakout—where the price movements surge past a resistance level, typically suggesting the onset of a bullish trend.
While increased transaction volume is generally viewed as a positive sign, relying on it exclusively serves as cover for the disclaimer that the price does not necessarily increase when the network activity does. In short, when analyzing price dynamics, draw from multiple sources of information.
From a technical perspective, XRP needs to decisively rise above the immediate resistance area around $2.22 in order to have a realistic shot at gaining more upward momentum. Earning trust at this level would serve as a strong… Pacing XRP’s path towards testing other lesser resistance points on the chart… Moving at $2.40… Moving at $2.60.
Currently, XRP is in what seems to be a critical testing phase. The next few days will be important in determining how the price approaches the main support and resistance zones, along with observing how the increased on-chain activity translates, if at all, to bullish price action. The combination of the increasing on-chain activity and the asset’s ability to sustain relatively calm price support above $2.15 points towards the conditions for a possible market recovery being more favorable.
In light of these observations, it is advisable that the traders monitor the price action alongside network metrics like transaction volume in the upcoming days. As is usually the case with volatile markets, however, caution is strongly suggested. If XRP manages to retain its current momentum and clear the major resistance levels, the possibility of saying a full recovery “may not be long” in coming is plausible
