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XRP shows signs of recovery with a 3.8% price increase, yet declining on-chain activity signals potential hurdles ahead for the cryptocurrency.
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Trading volume and futures activity have surged significantly, reflecting heightened market interest and volatility in XRP’s short-term outlook.
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According to COINOTAG, “While price momentum is positive, weakening ledger metrics such as transaction count and active addresses suggest cautious optimism among investors.”
XRP price rebounds amid rising trading volumes, but declining on-chain metrics raise concerns about the sustainability of this rally in the crypto market.
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XRP Price Recovery Supported by Increased Trading and Futures Activity
XRP has experienced a notable price uptick, currently trading around $2.25, marking a 3.8% gain over the past 24 hours. This movement places XRP near the upper boundary of its weekly trading range, between $2.09 and $2.29. The surge in 24-hour trading volume to approximately $2.65 billion—an increase of nearly 180%—indicates renewed trader interest and stronger market conviction. Complementing this, derivatives markets show a substantial rise in futures volume by over 200%, reaching $4.82 billion, alongside an 11.48% increase in open interest to $4.09 billion. These metrics suggest that traders are actively positioning themselves to capitalize on anticipated volatility, potentially driving short-term price fluctuations.
On-Chain Metrics Reveal Declining User Engagement on the XRP Ledger
Despite the positive price action, on-chain data from XRPScan presents a contrasting narrative. Payments between accounts have dropped from nearly 900,000 at the start of June to around 600,000 by June 8, signaling a reduction in transactional activity. Similarly, the total number of transactions has decreased from approximately 1.5 million to just over 1.1 million in recent days. The count of active addresses has also fallen below 20,000, reflecting diminished network participation. These indicators are critical as they often correlate with the underlying utility and demand for the XRP Ledger. The decline in these metrics raises questions about the durability of the current price rally, suggesting that the increase may be driven more by speculative trading than by fundamental network growth.
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Technical Analysis Points to Key Resistance and Support Levels
From a technical standpoint, XRP has managed to hold above a significant support level near $2.08, which has acted as a floor during recent price fluctuations. The current price is testing the middle band of the Bollinger Bands around $2.25, a pivotal point that could determine the next directional move. A successful breakout above this level may pave the way for a challenge of the upper Bollinger Band near $2.42, potentially signaling further upside momentum. Conversely, failure to surpass $2.25 could trigger a retest of the $2.08 support, with the risk of sliding into the $2.00–$2.05 range if bearish pressure intensifies.
Momentum Indicators Suggest Neutral to Cautious Outlook
The Relative Strength Index (RSI) remains near the neutral midpoint of 50, indicating neither overbought nor oversold conditions. While the recent recovery from oversold territory is encouraging, the RSI does not yet confirm strong bullish momentum. Should buying pressure increase, bulls may target resistance levels between $2.60 and $2.65, which were last tested in late May. However, until on-chain engagement metrics improve, these price gains may lack the fundamental support necessary for sustained upward movement.
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XRP’s recent price recovery is underpinned by increased trading volumes and heightened derivatives activity, reflecting growing market interest. However, declining on-chain metrics such as transaction counts and active addresses highlight potential challenges to the rally’s sustainability. Technical analysis reveals crucial support and resistance levels that will likely dictate XRP’s near-term trajectory. Investors should monitor both market sentiment and ledger activity closely, as the interplay between speculative momentum and fundamental network health will be key to XRP’s future performance.
Source: https://en.coinotag.com/xrp-price-shows-recovery-amid-rising-volume-but-declining-on-chain-activity-suggests-possible-challenges/
