The number of on-chain Ripple (XRP) transactions on the XRPL is down 65% from 2.5 million on March 19 to less than 900,000 on May 14, 2023.
XRP transactions crash
As of May 14, 2023, 852,000 transactions were processed by the XRPL, a Ripple Labs decentralized blockchain network built for rapid value transfer. This represents a 65% drop from the peak of March 19, when the total number of transactions on the XRPL exceeded 2.5 million.
Particularly there There has been no solid technical reason, such as blockchain or node vulnerability in the XRPL, during this time to explain the contraction in transaction volume.
However, what is clear is that the crypto market has been under pressure for the past two months from March to May 2023. This may have contributed to the decline in the number of on-chain transactions.
On On March 29, XRP prices peaked around $0.58. This was 10 days after the number of XRP transactions surged to its highest level on March 19. However, from the second half of March, the number of transactions and XRP prices have fallen.
XRP prices are down 27% to $0.42 at the time of writing in mid-May, down from $0.58 recorded on March 29. However, whether XRP prices will continue to track lower, in line with the number of XRPL transactions, remains uncertain.
In general, the number of on-chain transactions can directly affect transaction costs and prices. In addition, it can provide insight into the demand for the cryptocurrency and the blockchain network. The more demand for the token from the underlying network, the higher the trading volumes, and this increase can affect prices.
On the XRPL, users pay fees with XRP. Therefore, the greater the demand for XRP in trade settlement, the more upward pressure there will be for the home currency.
The contraction in the number of XRP transactions is at the root of falling prices. Nevertheless, it should be noted that the fall in XRP prices was not an isolated event. Like the other crypto prices, XRP and top coins including BTC and ETH have pulled back from recent peaks recorded in March and April 2023.
To illustrate, after rising to $31,000, BTC prices have since fallen to $25,800 on May 12.
In the meantime, XRP is currently trading at $0.41, down from $0.58 posted at the end of March 2023.
The SEC-Ripple case
The drop in XRP transactions may also be due to market sentiment as the community follows the ongoing SEC-Ripple case, which could end this year.
The United States Securities and Exchange Commission (SEC) in December 2020 charged Ripple executives with illegally offering initial coins and using XRP to raise funds in violation of federal security laws. In their assessment, the regulator says that XRP is an unregistered security.
Depending on the judge’s ruling in the coming month, the outcome of the lawsuit could affect not only XRP and activity on the XRPL, but also how regulators perceive crypto in the United States.
Feature image from Canva, chart from TradingView