Ripple’s Q2 2024 Market Report recently highlighted a decline in a crucial on-chain metric that could have a significant impact on the the XRP price. This decline in network activity and several other factors threaten to send the crypto token to new lows soon enough.
XRP records decrease with on-chain transactions
According to the reporton-chain transactions on the XRP Ledger (XRPL) fell by 65.6% in the second quarter of 2024. During this period, 86.38 million transactions were recorded, compared to 251.39 million in the first quarter of this year. A drop in network activity is significant as it highlights investor sentiment towards the XRP ecosystem.
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This decrease in network activity can also have a negative impact the XRP price, especially if this trend continues in the third quarter of the year. A plausible explanation for the decline in on-chain transactions for the XRPL in the second quarter is the underperformance of XRP in the first quarter of the year.
High expectations for XRP The run-up to the new year may have prompted investors to increase their exposure to crypto, leading to the spikes in network activity seen in the first quarter. However, these investors may have had a rethink as XRP failed to reach new highs even as Bitcoin hit a low new all-time record (ATH)leading to a decline in network activity in the second quarter.
The silver lining is that XRP investors have regained their bullish sentiment towards XRP, leading to increased network activity. Bitcoinist recently reported a spike in the number of new addresses and the number of addresses interacting on the XRPL, with these metrics reaching their highest levels since March earlier this year.
The revived bullish sentiment among XRP investors is mainly due to the belief that the court case between the US Securities and Exchange Commission (SEC) and Ripple could end soon, bringing a bullish outlook for the price of XRP. However, if that doesn’t happen quickly enough, XRP risks witnessing a significant price drop as activity on the XRPL decreases.
Other factors that could contribute to an XRP price crash
The bearish sentiment in the broader crypto market is another factor that could contribute to massive price drops for XRP. Bitcoin is having a hard time right now keep it above $50,000, and the flagship crypto could crash altcoins like XRP if it continues to fall to new lows. XRP is also well-positioned to be among the altcoins that will be hardest hit, given how the crypto token has responded so far Bitcoin’s recent crash below $60,000.
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The conclusion of the lawsuit between the SEC and Ripple could also negatively impact the price of XRP if the remedies awarded against the crypto company are in line with the Commission’s proposed remedies. The SEC did that asked Judge Analisa will impose a fine of $102.6 million on Ripple, which is far above the $10 million the crypto company had proposed.
At the time of writing, XRP is trading around $0.46, down more than 16% in the past 24 hours. facts from CoinMarketCap.
Featured image created with Dall.E, chart from Tradingview.com