XRP (XRP) managed to recapture the $1.31 support after briefly dipping below this level at the end of the American session yesterday.
This could have been a liquidity grab, and the market seems to be interpreting it that way, as the number of new wallets created within the XRP Ledger spiked yesterday.
On-chain data from Santiment shows that 4,772 new wallets were created in a single day, making this the 5th highest network growth print in the last 6 months.
Typically, this indicates increased positioning in the direction of the current price trend. In this case, we are still in bullish territory after recapturing that $1.31 level, as the market shifted from bearish to bullish on Tuesday upon breaking that mark.
There have also been a couple of announcements concerning the adoption of Ripple USD (RLUSD) by payment platforms as an on-chain settlement asset.
Cross River Bank and Arf announced this week that they are onboarding RLUSD as such, highlighting the success of Ripple’s ongoing efforts to boost adoption.
At the time of writing, the market cap of RLUSD sits at $2.37 billion, fairly near its all-time high. As banks, fintechs, and digital payment platforms continue to embrace this token, that could result in higher activity within the XRP Ledger, which should translate into increased volumes for XRP as the settlement asset.
Wall Street is Once Again Pouring Money Into XRP ETFs
That said, trading volumes are still fairly low at $1.6 billion, accounting for just 2% of the asset’s circulating market cap.
Yesterday, investors poured $3.6 million into exchange-traded funds (ETFs) linked to XRP. This is the highest amount added to these vehicles since October 8 and may indicate increased bullish positioning.
However, the ETF market is highly reactive and more of a trend follower than a trend setter. Hence, we would have to see further evidence in the charts that a true recovery has commenced before jumping to conclusions.
The markets are already entering the weekend, which is normally a period of thin volumes. With trading activity already sitting at relatively low levels, it is highly likely that we will see some erratic price swings in the next few days, unless we get a breakout below key levels like the $1.29 area.
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Now the price needs to rise past $1.33 to resume its rally. As long as that $1.29 support holds, this rally should still be alive.
Otherwise, it is highly likely that we will experience a retest of the $1.26 area in the near term. This is the last line of defense for bulls, as a drop below this mark could mark the beginning of a strong correction to the $1 level.
The Relative Strength Index (RSI) is still in bearish territory, sitting below the signal line and nearing the 40 area. We need to see a shift in momentum to confirm that buyers are once again in control. Until then, we don’t see an opportunity for a long position anymore.