Surge in XRP Wallets: Is a $3 Price Reversal on the Horizon?

Despite a 12% pullback, XRP is outperforming Ethereum and shows signs of a potential rebound, mainly due to recent inflows into the XRP Ledger (XRPL). As the market shifts to a risk-off approach, key supports are being tested.

Key Takeaways

XRP has seen a 12% decrease, yet it outperforms Ethereum, indicating a possible market decoupling from negative trends.
Although Total Value Locked (TVL) has dropped and wallet distribution leans towards long positions, overall commitment among investors remains below expectations.
The market has adopted a risk-averse attitude, resulting in significant support level breaks among top cryptocurrencies.

Ripple's XRP has experienced an 11.8% decline over the week, temporarily losing the support level at $2.6. In contrast, Ethereum (ETH) faced a more severe decline of 14%. This performance resonates with XRP's current state in the broader market context.

While the market volatility continues, the future performance in Q4 will rely on the stability of long-term investments amidst these fluctuations. With this in mind, is Ripple steering this market divergence?

XRPL network activity hits 8-month high - Is $3 XRP in sight?

XRPL Wallet Growth at its Highest Since Early 2023

XRP and its associated XRP Ledger (XRPL) appear to be diverging from the broader market trends. Even though XRP has dropped 12% in alignment with the market downturn, the XRPL is thriving with new capital inflow. If this trend continues, it could bolster XRP’s price recovery and position it favorably compared to other Layer 1 solutions.

Recent data from Santiment indicates that approximately 21,595 new wallets have been created on the XRPL since the beginning of November, marking the strongest growth since February.

XRPL

This growth showcases XRP’s relative strength against other major cryptocurrencies, backed by solid fundamentals. For instance, XRPL's stablecoin market cap surged by 44% over the past week, infusing an additional $94 million in liquidity and driving the total market cap to a record high of $307 million.

The influx of new wallets suggests an increase in accumulation, potentially stabilizing XRP’s support levels and creating the groundwork for a trend reversal. However, it raises the question: who is primarily responsible for this accumulation?

Are New Investors Seeking Quick Returns or Building Long-Term Positions?

The commitment of investors is crucial during this unpredictable market. Nonetheless, Ripple seems to be an outlier. The Total Value Locked (TVL) on the XRPL has seen a 6% drop to $76 million, reverting to figures last observed in early July. This decline suggests that long-term investor commitment is weak.

This current influx indicates a focus on quick gains, with many traders rotating their capital for immediate profits rather than committing to a longer-term hold of XRP. Currently, traders are leaning towards long positions.

XRP

In the short term, XRP has experienced an upturn in funding rates. This development means that long traders are in a position to cover shorts, indicating an expectation of future price increases. However, the significant presence of these long positions introduces a potential risk; should momentum shift, a squeeze could be triggered.

Moreover, the wallet count on the XRPL has decreased to 5,544, which reinforces the notion of weak long-term positioning. Given this scenario, if traders maintain their long bias, XRP might struggle to reclaim the $3 level in the near future.