XRP tests key support as on-chain activity stays elevated

Ripple (XRP) extends its correction, testing $1.40 support on Wednesday on the backdrop of last week’s rally from $1.00 to highs of $1.70. Despite the remittance token falling for two consecutive days, it upholds a constructive technical structure, raising the odds of another breakout attempt toward the pivotal $2.00 target.

The crypto market sentiment remains elevated at 65 in the Greed territory on Wednesday, down from 74 the day before, as reflected in the Fear & Greed Index. This higher risk appetite aligns with steady inflows into spot Exchange-Traded Funds (ETFs), which rose to $24 million on Tuesday from $14 million the previous day.

XRP on-chain activity paints bullish picture

The number of addresses actively interacting with the XRP Ledger (XRPL) by sending or receiving assets has risen to 297,000 as of Wednesday, from roughly 119,000 the day before. Although the figure falls short of Monday’s 358,000 active addresses, it is significantly higher than approximately 47,000 last Friday and 25,000 on August 1.

Growing on-chain activity suggests higher user engagement, which may positively affect the underlying asset, especially if the price is trending higher at the same time.

Nevertheless, traders should temper expectations because profit-taking remains a significant risk. According to Santiment, the cohort of addresses with between 1 million and 10 million addresses has sold the token over the last few days and now holds 5.89% of the total circulating supply as of Wednesday, down from 5.96% last Sunday.

The sudden price increase could be prompting profit-taking among XRP whales, following extended price doldrums that tested sub-$1.00 levels in mid-August. If selling continues and open-market supply increases, the ongoing correction may extend toward key support levels at $1.25 and $1.00, respectively.

Technical Analysis: XRP tests key support, eyeing another breakout

XRP trades around $1.44, extending its correction from last week's peak of $170. Despite the 72% rally from $1.00 cooling, the token broadly maintains a bullish bias as price holds well above the 50-day, 100-day and 200-day Exponential Moving Averages (EMAs).

Moreover, the recent surge in the Moving Average Convergence Divergence (MACD) into positive territory suggests solid upside momentum, even as the Relative Strength Index (RSI) remains overbought near 74, warning of potential consolidation rather than an immediate reversal.

Initial support lies at the 200-day EMA around $1.35, with deeper demand expected near the 100-day EMA at $1.19 and the 50-day EMA at $1.16 if a broader correction unfolds. On the topside, the next notable hurdle is the descending trendline resistance projected from $1.66. A sustained break above that structural cap would open the door for a rally continuation, while failure to clear it could keep XRP confined to a corrective phase above the clustered EMA support zone.

(The technical analysis of this story was written with the help of an AI tool. Know more.)