XRP Sees Surge in Spot Trading Volume Amid Declining On-Chain Activity and Positive Regulatory Developments

• XRP has emerged as a focal point in the cryptocurrency market, with dynamic trading volumes contrasting sharply with its declining on-chain activity.

• The surge in spot trading reflects increased interest from both institutional and retail investors, indicative of shifting market dynamics in 2025.

• According to Ripple’s Q1 2025 report, “Despite fluctuations, XRP retains a unique position driven by regulatory clarity and institutional support.”

This article explores XRP’s remarkable trading volumes amidst falling on-chain activity, shedding light on its evolving market position and regulatory influences.

XRP’s Spot Trading Volume Hits Record Highs Amid Regulatory Advances

In recent months, XRP has seen an unprecedented increase in its spot trading volumes, reaching an average of $3.2 billion per day in Q1 2025. This surge reflects a robust demand from both institutional and retail investors.

The remarkable peak of over $16 billion in late January and early February highlights a resurgence in trading activity following a period of regulatory uncertainty. Major exchanges now dominate trading, with Binance at the forefront, accounting for about 40% of total trading volume.

XRP Spot Exchange Volume Q1/2025. Source: Ripple

The increase in trading volume is paralleled by a noteworthy rise in the share of USD and stablecoin transactions, climbing from 25% in Q4 2024 to 29% in Q1. This shift marks a growing trend of interest towards fiat trading environments. Additionally, XRP’s price rallied significantly, peaking at $3.40, demonstrating resilience against competitors like Bitcoin and Ethereum.

Investment products linked to XRP also garnered impressive inflows, reaching $214 million year-to-date, nearly parallel to those of Ethereum, signaling robust investor confidence in the asset’s future.

Notably, some analysts express caution. “XRP’s daily trading volume has nosedived more than 86% over the past six months,” remarked crypto expert Steph, citing potential vulnerabilities within the current market structure.

Daily XRP Trading Volume on Centralized Exchanges. Source: Arkham

Despite the recent downturn in intraday volumes, pivotal regulatory advancements, such as the SEC retracting its appeal, have fostered a more secure environment for XRP. The introduction of XRP-based ETFs by major players like Franklin Templeton and CME has further validated institutional interest.

Declining On-Chain Activity Signals Potential Concerns

While trading volumes soar, on-chain activity on the XRP Ledger (XRPL) illustrates a divergent narrative. The Q1 2025 report explicitly outlines a 37.06% drop in transactions on XRPL, from 167.7 million in Q4 2024 to 105.5 million.

Additionally, new wallet creations experienced a steep decline of 40.28%, alongside a 30.89% decrease in amounts burned as transaction fees. The activity within the decentralized exchange (DEX) ecosystem has also diminished, with overall volume dropping 16.94% from $1 billion to $832 million.

Data from DefiLlama indicates that XRPL’s total value locked (TVL) has stagnated around $80 million, a meager amount for an asset of XRP’s caliber, with monthly DEX volumes hovering at an astonishingly low $3.3 million.

XRPL TVL and DEX volume. Source: DefiLlama

The Q1 report does offer a glimmer of hope, suggesting that Ripple’s strategic acquisition of Hidden Road, valued at $1.25 billion, could pave the way for increased on-chain utility and institutional applications.

As the report evaluates, “Ripple’s acquisition reflects a significant shift towards greater institutional engagement within the XRPL ecosystem,” hinting at potential avenues for rejuvenating on-chain activity.

Conclusion

Ripple’s Q1 2025 report encapsulates a dual-segmented reality: while XRP’s trading volumes exhibit a robust recovery amidst favorable regulations, a stark decline in on-chain metrics raises pressing questions about the platform’s ongoing utility. Moving forward, observance of both trading activity and on-chain dynamics will be essential for understanding XRP’s market trajectory.