• XRP starts the week on the back foot, challenging the $3.00 support level.
• Active addresses on the XRP Ledger extend decline, averaging above 22,500 as downside risks persist. 
• A descending trendline and the 50-day EMA hold as key support levels.

Ripple (XRP) is challenging the $3.00 support level on Monday amid a bearish shockwave criss-crossing the broader cryptocurrency market. Retail interest in the cross-border money remittance token remains elevated, as shown by the OI-weighted funding rate, which averages 0.0087% at the time of writing.

A positive and steady funding rate implies that more traders are piling into long positions. 

XRP OI-Weighted Funding Rate | Source: CoinGlass

XRP struggles at $3.00 as network activity slows

The elevated retail demand for XRP, as indicated by the futures weighted funding rate and Open Interest (OI), has not been reflected in on-chain activity. According to CryptoQuant’s data, active addresses on the XRP Ledger (XRPL) are down 55% to approximately 22,500 from roughly 50,000 in mid-July.

Such a reduction in addresses interacting with the network, whether by sending or receiving XRP, indicates reduced network engagement, low transaction volume and diminishing demand for the token.

If the downtrend in the Active Addresses metric persists, XRP could experience price stagnation or downside pressure. 

XRP Active Addresses | Source: CryptoQuant

Technical outlook: XRP could extend decline

XRP is trading around the $3.00 critical level on Monday, down from an intraday high of $3.06. The daily chart below shows a descending trend line support around the same level, increasing the potential for a rebound.

Still, the Relative Strength Index (RSI), which has dropped to 53 after peaking at 61 on Saturday, backs the short-term bearish outlook. If the RSI extends the decline below the midline, indicating that bullish momentum is fading, XRP could drop to retest the 50-day Exponential Moving Average (EMA) support at $2.94.

The 100-day EMA at $2.81 and the 200-day EMA at $2.56 are positioned to offer support in case investors significantly reduce their exposure.

XRP/USDT daily chart

Traders should monitor the Moving Average Convergence Divergence (MACD) indicator for insights into the next direction the XRP price is likely to take. If the blue MACD line remains above the red signal line, a bullish reversal toward resistance at $3.18, which was previously tested on Saturday, could gain momentum. 

Still, a sell signal would be confirmed if the same blue MACD line crosses below the red signal line, affirming risk-off sentiment. Investors often consider de-risking with the MACD indicator trending downward, while maintaining a sell signal.