XRP price could gain nearly 12% as on-chain metrics signal recovery

XRP price declined by 8% in the past week, extending a downtrend that has been underway since November 13. However, on-chain metrics suggest that some of the drivers which led to recent price declines are slowing down, in a sign that the altcoin could be on a path towards recovery. 

XRP price is $0.5292 at the time of writing, the lowest level in almost three months. 

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XRP on-chain metrics paint bullish picture

XRP’s on-chain metrics – such as whale transaction count, volume, market value to realized value, and network realized profit/loss support – a recovery in the altcoin’s price.

Whale transactions valued at $100,000 and higher have declined to 720 on January 22 from 1,332 on January 3. There is a decrease in whales shedding XRP at losses. While throughout January, large wallet investors have realized losses, the volume of these transactions has recently declined. 

Whale transaction count (>$100,000) and Network Realized Profit/Loss. Source: Santiment 

Another key on-chain metric, XRP distribution among market participants, shows bullish signs. In the last six months, XRP holders of between 10 million to 100 million tokens have consistently accumulated the asset during dips and distributed when the price hits a local peak. This typical behavior will likely repeat as whales accumulate XRP in the ongoing price dip. 

XRP distribution among whales. Source: Santiment 

Moreover, development activity in the altcoin hit a six-month low on 17 January, but increased afterwards. As development activity increases, there is a higher likelihood of a recovery in XRP price. 

XRP development activity. Source: Santiment 

XRP price looks at $0.5930

XRP price has been in a downtrend that started in November 2023.

On the upside, XRP price is likely to face resistance first at $0.5930, which aligns with the 38.2% Fibonacci retracement level of the decline between July 13 and August 17. Next resistances are at $0.6183 and at $0.6474. 

A rally from the current price of $0.5295 to the first resistance level would mark a 12% increase. 

XRP/USDT 1-day chart 

However, a daily candlestick close at $0.5007, the upper boundary of the imbalance zone, could invalidate the bullish thesis for recovery in XRP price. In the event of further decline, XRP price could find support at the upper boundary of the bullish imbalance zone at $0.5007. Further drop in XRP price could send the altcoin to its August 2023 low of $0.4210, as seen in the chart.