XRP price wobbles as sellers tighten grip amid on-chain activity

XRP faces mounting selling pressure with low on-chain activity

Interest in XRP has consistently dropped since its local top of $3.66 reached on July 18. The derivatives market reflects the low demand with the futures Open Interest (OI) falling to $7.56 billion after peaking at $10.94 billion on July 22.

Large volume holders have also been de-risking, possibly taking profits as XRP sustains a weak technical structure.

Santiment data shows that wallets with between 10 million and 100 million XRP are aggressively selling, reducing their holdings to 11.88% of the total supply from 13.12% recorded on July 27.

If aggressive selling persists, it will become increasingly difficult for XRP to sustain its recovery in the short term.

XRP Supply Distribution | Source: Santiment

On-chain activity on the XRP Ledger (XRPL) has also slowed significantly over the past few weeks. CryptoQuant data indicates a 54% decline in active addresses, from approximately 50,000 on July 18 to around 23,000 on Wednesday.

The sharp drop indicates a decline in user engagement and transaction activity on the protocol. In other words, XRP is facing declining adoption and user interest, resulting in low demand.

If the trend is sustained, reduced confidence in the token's ability to hold its value or recover could take center stage. Still, temporary dips tend to be normal, paving the way for new entry opportunities and a stronger rebound in the price.

XRP Active Addresses | Source: CryptoQuant

Technical outlook: XRP poised for further decline

XRP price is edging closer to the 100-day Exponential Moving Average (EMA) at $2.77 as overhead pressure intensifies. The Moving Average Convergence Divergence (MACD) indicator has maintained a sell signal since July 25, underscoring the bearish bias.

XRP/USDT daily chart

The Relative Strength Index's (RSI) gradual decline to 42 mirrors the bearish market sentiment, stemming from whales' selling and low on-chain activity. If the RSI prolongs the downtrend into oversold territory, bearish momentum will intensify, increasing the likelihood of XRP falling to test the 200-day EMA support at $2.51.

Cryptocurrency prices FAQs

How do new token launches or listings affect cryptocurrency prices?

Token launches influence demand and adoption among market participants. Listings on crypto exchanges deepen the liquidity for an asset and add new participants to an asset’s network. This is typically bullish for a digital asset.

How do hacks affect cryptocurrency prices?

A hack is an event in which an attacker captures a large volume of the asset from a DeFi bridge or hot wallet of an exchange or any other crypto platform via exploits, bugs or other methods. The exploiter then transfers these tokens out of the exchange platforms to ultimately sell or swap the assets for other cryptocurrencies or stablecoins. Such events often involve an en masse panic triggering a sell-off in the affected assets.

How do macroeconomic releases and events affect cryptocurrency prices?

Macroeconomic events like the US Federal Reserve’s decision on interest rates influence crypto assets mainly through the direct impact they have on the US Dollar. An increase in interest rate typically negatively influences Bitcoin and altcoin prices, and vice versa. If the US Dollar index declines, risk assets and associated leverage for trading gets cheaper, in turn driving crypto prices higher.

How do major crypto upgrades like halvings, hard forks affect cryptocurrency prices?

Halvings are typically considered bullish events as they slash the block reward in half for miners, constricting the supply of the asset. At consistent demand if the supply reduces, the asset’s price climbs.