Ripple’s XRP, currently trading around $2.33, is at a critical juncture as its recent upward momentum stalls amid weakening network engagement and strategic sell-offs by large holders. After peaking at $2.65 on May 12, the price has pulled back, testing key technical support near the 50-day Exponential Moving Average (EMA) at $2.28. While broader crypto market sentiment remains cautiously optimistic—especially with Bitcoin approaching new highs—XRP shows signs of internal fragility that could derail its path back to $3.00.
Declining Network Activity Signals Weakening Demand
Despite price stabilization above short-term support, on-chain metrics reveal a troubling trend: declining user engagement on the XRP Ledger. According to data from Santiment, the number of daily active addresses has plummeted by approximately 95% from its Q1 peak of 612,000 to just 33,400.
This dramatic drop in new address creation suggests a significant slowdown in organic adoption and ecosystem activity. Historically, surges in active addresses have preceded or coincided with bullish price movements, reflecting increased utility and speculative interest. The current lull, however, indicates tepid demand—even as prices recovered from the April 7 low of $1.61.
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The timing of this decline aligns closely with XRP’s price correction from its Q1 high of $3.40. Although the asset rebounded to $2.65 in mid-May, the lack of sustained network growth raises concerns about the durability of this rally. Without renewed participation from developers, institutions, or retail users, long-term price appreciation may be difficult to achieve.
Whale Holders Reduce Exposure Amid Profit-Taking Phase
Another red flag for XRP bulls is the ongoing reduction in holdings by mid-tier "whale" investors—those holding between 100,000 and 1 million XRP. Data from Santiment’s Supply Distribution metric shows this cohort now controls 10.32% of the total supply, down from 10.76% in early March and 11% in November 2024.
This gradual but consistent outflow began during Q4 2024, accelerating as XRP’s price surged—a classic sign of profit realization. These investors likely accumulated positions during earlier consolidation phases and are now capitalizing on improved valuations.
Such behavior reduces buying pressure and increases potential sell-side liquidity, creating headwinds for upward price momentum. If this trend continues, it could weaken market structure just as technical indicators begin to flash caution signals.
Futures Market Reflects Fading Trader Interest
Beyond on-chain data, derivatives markets are also signaling waning enthusiasm for XRP. Open Interest (OI) in XRP futures has declined to $4.59 billion from a peak of $5.52 billion on May 14. OI represents the total value of outstanding derivative contracts and serves as a proxy for market participation and conviction.
A falling OI, especially during a price consolidation phase, often indicates that traders are closing leveraged positions—either due to losses or lack of confidence in near-term direction. This is further supported by a drop in trading volume to approximately $4.43 billion, reinforcing the narrative of diminishing interest.
Lower volume combined with reduced open interest and bearish technical patterns suggests that speculative momentum is fading. This trifecta typically precedes extended sideways movement or downside corrections, particularly when macro support is neutral.
Technical Outlook: Bulls Defend Key Support Levels
On the daily chart, XRP is currently testing support at the 50-day EMA (~$2.28), which has held since the April recovery. A break below this level could open the door to more aggressive selling, with next targets at the 200-day EMA ($2.05) and the April low ($1.61).
Technical indicators are increasingly favoring bears:
- The MACD has generated a valid sell signal, with the blue line crossing below the red signal line.
- The Relative Strength Index (RSI) is trending downward at 52—just above neutral—and a drop below 50 would confirm bearish dominance.
For bulls to regain control, they must push price back above $2.65 with strong volume and re-establish a higher-low structure. Until then, the path of least resistance appears downward.
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Can XRP Return to $3? Conditions for a Bullish Revival
While current conditions pose challenges, a return to $3 remains possible under the right catalysts:
- Resurgence in network usage – Increased adoption through partnerships, CBDC integrations, or remittance platform expansions could reignite interest.
- Positive regulatory clarity – Progress in Ripple’s ongoing legal proceedings may boost investor confidence.
- Broader crypto market rally – A strong BTC-led surge could lift altcoins like XRP despite weak fundamentals.
- Whale accumulation resumes – Reversal in large-holder behavior would signal renewed conviction.
Until one or more of these factors materialize, upside potential remains constrained.
Frequently Asked Questions (FAQ)
Q: What causes XRP’s price to drop despite Bitcoin rising?
A: While Bitcoin often leads the market, individual altcoins like XRP react to their own on-chain dynamics, investor behavior, and project-specific news. Weak network activity and whale sell-offs can override general market momentum.
Q: How do declining active addresses affect XRP’s future?
A: Fewer active addresses suggest lower user engagement and reduced utility demand, which can limit price growth regardless of speculative interest.
Q: What does falling open interest mean for XRP traders?
A: Declining open interest indicates traders are exiting positions, signaling loss of confidence or reduced leverage use—often a precursor to extended consolidation or downtrends.
Q: Is XRP still a good investment if whales are selling?
A: Whale movements should be analyzed in context. Profit-taking after gains is normal; sustained accumulation is a better long-term signal. Diversified analysis including fundamentals and technicals is essential.
Q: What technical levels should XRP watchers monitor right now?
A: Key levels include immediate support at $2.28 (50-day EMA), then $2.05 (200-day EMA), and $1.61 (April low). Resistance lies at $2.65 and $3.00.
Q: Could macroeconomic factors help XRP rebound?
A: Yes. A dovish Fed stance weakening the US dollar could boost risk assets like cryptocurrencies, providing tailwinds even for underperforming altcoins.
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In summary, while XRP maintains crucial support and retains upside potential, multiple warning signs—from fading engagement to profit-taking whales—suggest caution. Investors should monitor both on-chain health and broader market trends closely before positioning for a breakout toward $3.00.