XRP’s price recorded an incredible 100% rise on the same day as the landmark ruling in the XRP securities lawsuit, but buyers are now struggling to sustain these gains.
The trigger for the price surge was a U.S. Securities and Exchange Commission (SEC) lawsuit against Ripple in which Judge Analisa Torres of the United States District Court for the Southern District of New York ruled that the sale of XRP (XRP) to individual investors did not qualify as a security.
While there is a resurgence of interest in trading XRP, technical and network usage data point to a near-term pullback.
Traders flock to XRP but network growth stagnates
Open interest in XRP futures contracts, which represents the total amount of open bets on the asset, surged to its highest level since November 2021, reaching $1.19 billion on July 20, according to CoinGlass data.
XRP’s spot trading volume surpassed that of Bitcoin (BTC) and Ether (ETH), and sentiment was further boosted by the relisting of XRP by US-based exchanges such as Gemini and Coinbase.
Despite these positive developments, the network’s activity has not witnessed a similar increase. The number of transactions on the XRP Ledger has remained stable for over a year, indicating a lack of new entities actively participating in the network.
The XRP Ledger is a blockchain-based distributed ledger technology created by Ripple Labs. XRP is used as a payment token on the network and is also used to secure the blockchain.
Since Ripple’s partial victory in the SEC lawsuit, Ripple has stepped up its efforts to adopt the XRP ledger. I’m joining Invested $54 million in Metaverse project, Futureverse.
The company also aims to re-establish relationships with banks in line with its original vision of facilitating low-cost global payments. These will likely drive the growth of the XRP Ledger’s network and act as a positive catalyst for the market.
XRP/USD price analysis
Technically, the XRP/USD pair is showing resistance from the long-term bearish trendline since its peak in 2018. A weekly close above this level should strengthen investor sentiment and end the bearish trend.
If buyers fail to sustain the bullish momentum, XRP/USD is likely to revisit the support near $0.54 before moving higher.
The XRP/BTC pair is also stuck at long-term resistance levels between 0.00002533BTC and 0.00003341BTC. Buyers have not moved above this level since 2019. If the support fails to build above this level, the pair can revisit the support around 0.00001555 BTC.
Related: XRP Price Could Fall 40% By September – Fractal Analysis
A correction is considered bullish if the pair finds support at the 50-period MA at 0.00002057 BTC or the 200-period MA at 0.00001913 BTC.
As previously mentioned, XRP futures open interest has reached a two-year peak of over $1 billion in notional value. Therefore, XRP can exhibit high volatility in the short term.
The perpetual swap funding rate, which represents the relative demand for long or short orders in the token, has trended positive since the court’s iconic ruling, suggesting most traders have added long positions, again raising the possibility of a correction to explore liquidation levels for over-leveraged buyers.
Given positive regulatory developments, technological advances, and the token’s popularity among retail users, the arrival of positive catalysts related to XRP’s mainstream adoption could end XRP’s long-term negative trend within weeks.
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