Key Takeaways

• Declining daily active and new addresses on the XRP Ledger signal reduced network utilization and demand for XRP.
• XRP’s open interest has decreased by 30% in the last month, indicating waning investor positioning.
• XRP price remains confined within a tight range near $2.33, with technical indicators suggesting potential further downside.

XRP’s price has been consolidating within a narrow $2.05-$2.33 band over the past 30 days, falling short of the $3.00 threshold. This consolidation is attributed to several key data points highlighting diminishing interest and technical headwinds.

Declining XRP Ledger Network Activity

On-chain data indicates a significant drop in activity on the XRP Ledger. According to Glassnode, the number of new daily addresses created on the network has plummeted to near 3,500 recently, a stark contrast to the 15,823 addresses seen on January 16th.

Furthermore, daily active addresses (DAAs) also saw a sharp decline, reaching 34,360 recently after previously hitting a three-month peak of 577,000. This signifies reduced network participation and potentially waning confidence in XRP’s immediate prospects.

Declines in such network metrics historically often precede periods of price stagnation or correction, as lower transaction volume can reduce liquidity and buying pressure.

Decreasing Open Interest Reflects XRP Price Stagnation

XRP’s struggle to breach the $3.00 mark is further underscored by falling open interest (OI) data from CoinGlass. OI, a measure of the total value of outstanding derivative contracts, has dropped by 30%, falling to $3.89 billion from $5.53 billion, suggesting investors are closing positions anticipating further price declines.

Historical precedents, such as the significant pullback in early 2024, support the view that substantial drops in open interest can precede bearish price action.

XRP Price Suppressed by Moving Averages

Technical analysis confirms XRP’s consolidation below critical support levels. Data shows the price remains confined below a major resistance zone spanning $2.22 to $2.40, which is currently occupied by key simple moving averages (SMAs).

If bulls cannot breach these moving averages, the altcoin may continue consolidating below them for an extended period. Previous breaches of this zone resulted in extended sideways trading (30 and 65 days) followed by further declines and subsequent upward breaks.

“XRP price continues to struggle with the $2.25 level,” said XRP analyst CasiTrades. “As long as this remains resistance, it increases the likelihood we’ll test the lower levels: $2.01, $1.90, even $1.55 are still on the table.”

This structure aligns with a descending triangle formation, implying potential downside if support near $2.00 is breached, possibly targeting the $1.20 area.

Complementing this bearish signal, the Relative Strength Index (RSI) has retreated from overbought territory to 51, indicating strengthening downward momentum.

While short-term bearishness dominates, a long-term perspective offers a contrasting view. XRP’s current 200-day consolidation below $3 could, in theory, precede a substantial breakout, similar to the 2017 cycle.