Ripple (XRP) Price Analysis: What Next for XRP as Transactions Drop 69% ?

XRP price stumbled at the $0.61 resistance on Thursday July 25 amid bearish headwinds from Ethereum ETFs, on-chain data analysis shows how a decline in network transactions could impact future price action. 

XRP’s 17% Rally Halts amid Ethereum ETF’s $133M Outflows

The crypto market began the week on the uptrend, before things took a negative turn around July 30. Amid several bullish catalysts, the Ethereum ETFs capital outflows triggered intense volatility as the week unfolded.

Expectedly, as one of the best performing assets from last week, Ripple (XRP) has attracted considerable selling pressure from traders booking short-term gains amid the market volatility.

In effect, XRP price which initially raced into a 72% rally in the last 20-day of July, finally entered downtrend.

This underwhelming price performance has been linked a recent report which shows that XRPLedger network has struggled to for traction in Q2 2024.

The volume of transactions on the XRP Ledger (XRPL) fell significantly from the first quarter to the second quarter of 2024, with the average transaction cost surging, according to Ripple’s “Q2 2024 XRP Markets Report.”

XRPL onchain transaction activity declined by 65.6% during Q2 of 2024, with approximately 86.38 million transactions recorded vs. 251.39 million transactions clocked in Q1 of 2023, the report published on Aug. 2 highlighted.

“Activity across most major protocols decreased in Q2. XRPL was no exception with on-chain activities noticeably lower in Q2 as compared to Q1,” Ripple stated.

The decline in transaction activity came as the cost per transaction surged 168% during the quarter per transaction. Ripple explained that this cost increases with network load to protect the peer-to-peer network from spam.

XRP Price Forecast: Bulls Could Retreat Towards $0.55

XRP price action has recently shown signs of weakness, as evidenced by the technical indicators. The Bollinger Bands (20, SMA, close, 2) indicate increased volatility with the price currently trading near the lower band at $0.5465, suggesting potential downside pressure. The Relative Vigor Index (RVI) stands at 46.78, below the 50 level, signaling bearish momentum.

The price drop of 17.18% over the past three days highlights a significant bearish trend. This decline has brought XRP close to a critical support level at $0.5465. If this support is breached, the next key level to watch would be around $0.50, which could act as a psychological support for the bulls.

Conversely, if the bulls manage to defend the $0.5465 support, a rebound towards the resistance levels at $0.5934 and potentially $0.6403 could be on the cards. However, the bearish sentiment indicated by the RVI and the positioning within the Bollinger Bands suggests that a further retreat towards $0.55 is more likely in the near term