XRP Shows Potential for Recovery Amid Mixed Signals and Declining Network Activity

• Ripple’s XRP demonstrates mixed signals as technical indicators align amidst declining on-chain activity, raising questions about its near-term trajectory.

• While whale clusters indicate potential upward momentum, stagnant on-chain metrics suggest caution among investors.

• According to COINOTAG, “Despite optimistic signals from traders, broader market conditions are creating a climate of uncertainty.”

Explore the latest developments in Ripple’s XRP as it balances bullish signals and declining activity in the crypto market.

Whales and leverage clusters gather near the $2.38 zone

The liquidation heatmap reveals dense clusters of short liquidations just above the current price, suggesting that XRP could trigger a short squeeze if upward momentum persists. Significant Open Interest (OI) exists between $2.40 and $2.45 across platforms like Binance, OKX, and Bybit. This suggests potential price acceleration if these levels are breached.

Meanwhile, long liquidation pressure remains relatively low below $2.30, offering some support against an immediate downturn. If bulls can capitalize on the buying pressure, XRP may achieve a notable recovery.

Source: Coinglass

Despite the positive sentiment, the OI-Weighted Funding Rate remained nearly flat at 0.0017%. This neutral reading implies that neither longs nor shorts dominate the market. Historically, such readings accompany consolidation phases where price action tightens before a major breakout or breakdown. This also aligns with the stability in OI trends over recent sessions.

Mixed signals from exchange flows cloud short-term outlook

On the 18th of May, XRP recorded $42.74 million in inflows against $37.76 million in outflows across major exchanges. Although this suggests that more capital entered than exited, the difference is not substantial enough to confirm strong accumulation.

This mixed flow paints a picture of indecisiveness among market participants. Some investors may be repositioning for a bounce following recent price action, while others may be cashing out. This uncertainty can lead to heightened volatility in the near term.

Source: Coinglass

XRP network activity sees a notable decline despite price stability

On-chain metrics reveal a concerning drop in engagement. Currently, Daily Active Addresses have fallen to 8,706, while the Transaction Count sits at 123.16K. These declines follow a period of heightened activity observed in March and April, indicating decreased interest from retail users and lower utility on the XRP ledger.

The stable price action accompanied by diminishing user participation may reflect fading momentum or reduced speculative interest, which poses risks to sustained growth unless reversed soon.

Source: Santiment

Breakout retest holds: Can XRP extend its climb?

Technically, XRP has successfully retested the upper boundary of a descending wedge, maintaining its position above the 0.382 Fibonacci level ($2.365). This price action solidifies the wedge breakout as it remains intact. However, to unlock further upside, bulls must reclaim resistance near $2.542, aligning with the 0.618 Fibonacci level.

Failure to breach this threshold could confine the price within a narrow range, stressing the importance of the next few sessions. Maintaining support above $2.30 could validate continuation; however, any rejection could invite downside retests of $2.25 or lower.

Source: TradingView

Conclusively, XRP shows early signs of recovery driven by bullish sentiment, buy signals, and a technical breakout retest. However, declining network activity and indecisive funding metrics suggest limited fuel for a sustained rally. If XRP holds above $2.30 and breaks above $2.54 resistance, momentum could accelerate; otherwise, short-term consolidation remains likely.