The circulation of XRP has taken a drastic hit, plunging to its lowest level in five years. This sharp decline signals a lack of investor engagement and growing bearish sentiment in the market. With transaction velocity hitting levels not seen since January 2020, XRP’s momentum appears to be weakening, casting doubts on its near-term recovery.
XRP’s Declining Activity Raises Concerns
The drop in XRP’s velocity is a major red flag for investors. A low transaction rate typically indicates hesitation among market participants, with many opting to hold rather than trade. This stagnation suggests a prevailing lack of confidence, with investors unwilling to move their assets amid uncertain conditions. Without an uptick in circulation, XRP could struggle to gain traction and break free from its current downturn.
Adding to these concerns is XRP’s Chaikin Money Flow (CMF) indicator, which has dropped to a four-month low. Currently below the zero line, the CMF reflects dwindling buying pressure and a reluctance among investors to inject fresh capital into the asset. This persistent bearish sentiment could further impede XRP’s ability to stage a meaningful comeback in the short term.
Can XRP Rebound?
At present, XRP is trading at $2.36, facing a crucial resistance level at $2.56. This price barrier has historically been difficult to overcome, and without increased trading activity, XRP is unlikely to break past it. Failing to breach this level could lead to further downside, with potential dips toward $2.27 or even $2.14, extending its consolidation phase and eroding recent gains.
For XRP to reverse this negative trend, it must secure a breakout above $2.56 and establish it as a support level. If this happens, XRP could target $3.00, reclaiming lost ground from earlier in the year. However, such a move would require a significant shift in investor sentiment and broader market conditions to fuel renewed interest and activity.
Also Read: XRP Price Reaction to SEC Case Dismissal: Analysts Weigh In
Until then, XRP remains under pressure, with declining circulation and weak buying interest acting as major roadblocks to recovery.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of CoinBrief.io. Before making any investment decisions, you should always conduct your own research. Coin Brief is not responsible for any financial losses.
