XRP Rally Hits a Wall: Liquidation Tsunami Meets Stalled Network Growth

Ripple’s XRP faces a brutal reality check as traders rush for exits—network activity flatlines while leveraged positions get obliterated. The ’banker’s crypto’ suddenly isn’t looking so cozy.

Liquidation metrics scream danger: over $120M in XRP long positions vaporized in 48 hours as the token struggles to hold $0.50. Meanwhile, active addresses plateau—no fresh blood means no fuel for the next leg up.

Smart money’s rotating into Ethereum ETFs (how very institutional of them), leaving XRP stuck in regulatory purgatory. But hey, at least the SEC lawsuit distraction makes for great volatility trading—if you enjoy gambling with a burning fuse.

XRP rally slows as network activity shrinks

The XRP Ledger showcases mixed signals with Sentiment’s Network Activity metric consistently falling from nearly 16,000 addresses in January to approximately 3,400 addresses on May 7.

Declining network growth for XRP indicates fewer new addresses and reduced user engagement, signaling weaker demand. The 78.7% figure could undermine the rally, as observed with the xrp price (green line) on the chart below. Since its peak of $3.40 in January, XRP tumbled to $1.61 before reversing the trend in the second week of April.

Network Activity metric | Source: Santiment 

Meanwhile, XRP’s price hovers at $2.53, as liquidations in the derivatives market surge. CoinGlass highlights $10.14 million in liquidations over the past 24 hours. Long positions accounted for the lion’s share of the liquidations at $8.44 million compared to $1.69 million in shorts.

XRP derivatives market data | Source: CoinGlass

The increase in long position liquidations, as well as the drop in open interest (OI) and trading volume, hints at cooling speculative activity. Lower trading volume at $8.69 million from approximately $19.5 million on Monday implies crunching liquidity, potentially augmenting volatility, especially if traders adjust positions, increasing sell-side pressure. The slight decline in OI by 1% to $5.41 billion indicates the unwinding of Leveraged positions, potentially from profit-taking or liquidations. 

Looking ahead: Can XRP re-ignite the rally eyeing $3?

XRP’s price sits significantly above key moving averages, including the 50-day, the 100-day and the 200-day Exponential Moving Averages (EMA), signifying a relatively strong tailwind despite the minor pullback from $2.65 reached on Wednesday. 

The Moving Average Convergence Divergence (MACD) indicator upholds a buy signal above the centre line, buoyed by green histograms. This highlights a sustained bullish momentum for XRP and shows that interest in XRP is still elevated, with the uptrend likely to resume towards $3.00.

XRP/USD daily chart

Traders should consider the possibility of the down leg extending in upcoming sessions, especially with the Relative Strength Index (RSI) indicator at 63.34 and sliding toward the midline of 50, highlighting weakness in the uptrend. 

If declines persist, accentuated by potential profit-taking, tentative support levels WOULD come into play, ranging from the 50-day EMA at $2.27, the 100-day EMA at $2.25 and the 200-day EMA at $2.00.

Ripple FAQs

What is Ripple?

Ripple is a payments company that specializes in cross-border remittance. The company does this by leveraging blockchain technology. RippleNet is a network used for payments transfer created by Ripple Labs Inc. and is open to financial institutions worldwide. The company also leverages the XRP token.

What is XRP?

XRP is the native token of the decentralized blockchain XRPLedger. The token is used by Ripple Labs to facilitate transactions on the XRPLedger, helping financial institutions transfer value in a borderless manner. XRP therefore facilitates trustless and instant payments on the XRPLedger chain, helping financial firms save on the cost of transacting worldwide.

What is XRPL?

XRPLedger is based on a distributed ledger technology and the blockchain using XRP to power transactions. The ledger is different from other blockchains as it has a built-in inflammatory protocol that helps fight spam and distributed denial-of-service (DDOS) attacks. The XRPL is maintained by a peer-to-peer network known as the global XRP Ledger community.

What blockchain technology does XRP use?

XRP uses the interledger standard. This is a blockchain protocol that aids payments across different networks. For instance, XRP’s blockchain can connect the ledgers of two or more banks. This effectively removes intermediaries and the need for centralization in the system. XRP acts as the native token of the XRPLedger blockchain engineered by Jed McCaleb, Arthur Britto and David Schwartz.