Is XRP Preparing for a Major Breakout?

Summary:
Recent trends in XRP’s price dynamics indicate a potential breakout, fueled by institutional accumulation despite declining on-chain activity. As interest from new spot exchange-traded funds (ETFs) grows, a notable shift in market behavior might be on the horizon.

Key Takeaways

XRP's price dynamics are experiencing shifts due to newly launched ETFs in the U.S.
The decline in XRP Active Addresses is a sign of retail investor absence, indicating institutions may be accumulating XRP.
A supply shock is expected due to ETF inflows and institutional buying.
A potential price surge is anticipated if retail liquidity returns significantly.

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Institutional Accumulation Indicates Potential Price Surge

On November 28, Cryptonchain shared insights via a Quicktake post on the CryptoQuant platform, highlighting significant trends in XRP's recent market behavior. A notable metric discussed was the XRP Active Addresses, which measures the number of wallet addresses actively engaging with the XRP Ledger over a specific timeframe. This metric sheds light on retail activity, the overall health of the network, and the demand for XRP.

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Source: CryptoQuant

According to the analyst, the Active Addresses metric has dropped to about 19,400, marking its lowest level in 2023. Interestingly, this decline contrasts with the asset's usual correlation between price and network activity. CryptoOnchain commented that despite the XRP Ledger hitting its lowest levels, the $2.20 support level remains robust. This unusual circumstance suggests that institutions may be accumulating XRP outside the typical network activity patterns.

Typically, retail interest drives price increases, leading to spikes in network activity due to FOMO (Fear Of Missing Out) among traders. In contrast, institutional investments often occur through over-the-counter (OTC) desks and custodial services—such as Coinbase Prime and BitGo—resulting in more subdued network activity.

Implications for XRP's Future Price

The online analyst noted that the drop to levels around 15,000 to 19,000 active addresses suggests a significant reduction in retail investor participation—an investor group known for its aggressive buying behavior. With retail scarcity stabilizing prices, it signals an increasing supply shock due to inflows from ETFs and enhanced institutional buying.

Given these conditions, CryptoOnchain believes it's logical to anticipate a significant increase in XRP's price, provided that retail liquidity makes a robust comeback.

Currently, the XRP token is valued at $2.18, reflecting over a 2% increase in the past 24 hours. Additionally, according to CoinGecko, XRP has risen by more than 14% over the last week.

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The price of XRP on the daily timeframe | Source: XRPUSDT chart on TradingView