Ripple (XRP) is trading above the $2.00 support at the time of writing on Tuesday. The recovery remains elusive despite steady inflows into spot exchange traded funds (ETFs), which have attracted a total of $1.23 billion.
Despite reports of steady inflows, lower retail demand, slower on-chain activity, and macroeconomic uncertainty are among the factors that could contribute to the decline in price action.
Low on-chain activity impacts XRP price outlook
The number of addresses actively transacting on the
Address activity on the protocol has declined steadily since July from 66,000, indicating a decline in user engagement. Further declines would mean less retail demand, depriving XRP of the tailwind it needs to sustain a recovery.
Meanwhile, the XRP derivatives market has been steadily weakening since January 6, when futures open interest (OI) rose to $4.55 billion. Coinglass data shows OI, which represents the outstanding value of futures contracts, averaged $3.93 billion on Tuesday, reflecting a sequential decline.
This continued decline suggests that investors are losing confidence in XRP’s ability to maintain its uptrend and may adopt risk management measures to limit further losses.
Technical Outlook: XRP consolidates amid mixed signals
At the time of writing on Tuesday, XRP is trading within a small range with support at $2.00 and resistance at the 50-day exponential moving average (EMA) at $2.07. The Relative Strength Index (RSI) on the daily chart is at 52, indicating a lack of momentum. However, due to a slight downside divergence, sellers may maintain an edge over buyers in the short term.
The Moving Average Convergence Divergence (MACD) indicator on the same chart is posted to flash a sell signal if the blue MACD line crosses below the red signal line. The presence of a red histogram extending below the average line will prompt traders to reduce risk exposure – a move that is likely to increase selling pressure.
A close below the 50-day EMA would strengthen the short-term bearish outlook for XRP and increase the chances of the coin declining further below $2.00. The next demand area is at $1.81, which was tested on January 1.
Nevertheless, if bulls overcome the 50-day EMA, a 9% breakout could occur, with targets at the 100-day EMA at $2.21 and 200-day EMA at $2.33.
