In a recent market report for Q2 2024, Ripple revealed a significant decline in an essential on-chain metric that could heavily influence the price of XRP. The report underscored a dramatic drop in network activity, among other factors, which could potentially drive the cryptocurrency to new lows.
During the second quarter, on-chain transactions on the XRP Ledger (XRPL) plummeted by 65.6%. This period saw only 86.38 million transactions, a stark contrast to the 251.39 million transactions recorded during the first quarter of the year. Such a decline in network activity is crucial as it reflects investor sentiment towards the XRP ecosystem.
The dip in network activity could adversely affect the XRP price, particularly if this downward trend persists into the third quarter. A conceivable reason for this decline is XRP’s underperformance in the first quarter. High expectations for XRP at the start of the year likely led investors to increase their participation, causing a surge in network activity in Q1. However, as XRP failed to achieve new highs—even as Bitcoin reached a new all-time high—investors’ enthusiasm waned, resulting in reduced network activity in Q2.
However, there is a glimmer of hope. Investors’ bullish sentiment towards XRP has made a comeback, resulting in increased network activity. Reports indicate a rise in new addresses and those interacting on the XRPL, hitting peak levels not seen since March of this year.
This renewed optimism stems mainly from the belief that the lawsuit between the US Securities and Exchange Commission (SEC) and Ripple may soon be resolved, potentially boosting XRP’s price. Yet, if the lawsuit doesn’t conclude favorably soon, XRP could face significant price declines as XRPL activity drops.
Additionally, a broader bearish sentiment in the cryptocurrency market poses another threat to XRP’s price stability. Bitcoin’s struggle to maintain its position above $50,000, coupled with its dip below $60,000, could send altcoins like XRP tumbling. Given XRP’s sensitivity to Bitcoin’s fluctuations, it stands at significant risk among altcoins.
The outcome of the SEC lawsuit could also adversely impact XRP’s price, especially if the court’s decision aligns with the SEC’s proposed penalties. The Commission has requested a $102.6 million fine against Ripple, far exceeding the $10 million Ripple has offered.
As of now, XRP is trading at approximately $0.46, having dropped more than 16% in the past 24 hours, according to CoinMarketCap.
In light of these developments, the path forward for XRP remains uncertain. The cryptocurrency faces a period of volatility heavily influenced by both internal performance metrics and broader market conditions, leaving its future price trajectory hanging in the balance.
