XRP has recently displayed a stark contrast between its price movements and on-chain activity, raising concerns about the sustainability of its recent gains. While the price has experienced a notable surge, key on-chain metrics suggest a more cautious outlook. XRP’s price has shown significant momentum as it broke past a descending triangle resistance zone. This breakout propelled XRP to around $2.63, marking a 5.62% daily gain and potentially signaling the beginning of a bullish rally. The surge has generated optimism among investors, but the price alone may not tell the full story.
Source: CoinMarketCap
Declining On-Chain Activity: A Cause for Concern
In contrast to the positive price action, on-chain metrics reveal concerning trends. After peaking at nearly two million payments on Dec. 2, transaction numbers have sharply declined, falling to around one million. This steep drop indicates a slowdown in network activity, which could suggest reduced utility and network participation.
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Furthermore, XRP’s payment volume has decreased significantly, from three billion to under one billion in recent days. This sharp decline in transaction volume highlights the weakening demand for XRP. The number of active accounts has also dropped considerably, with activity falling from over 100,000 during the late November rally to below 50,000. These declining metrics point to a decrease in user engagement, which raises concerns about the long-term sustainability of XRP’s price gains.
Technical Outlook: Critical Levels to Watch
From a technical standpoint, XRP’s immediate support zone is near $2.10, which aligns with the 50-day EMA. This level could act as a cushion if selling pressure intensifies. On the upside, $2.85 represents the key resistance level that investors will need to monitor.
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For XRP to confirm a bullish breakout, it must surpass this level while maintaining healthy network activity. While XRP’s price movement is encouraging, the lack of strong on-chain fundamentals raises doubts about the sustainability of its rally.
Investors should closely monitor transaction volumes and network activity for signs of a more stable recovery. If the on-chain metrics do not improve, XRP may face a retracement, and its recent price surge could lose momentum.
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