Why XRP’s $19 Billion Gain Might Be Driven By Speculative Trades

The value of Ripple’s XRP has rocketed over the past week, adding $19 billion to its market capitalization. It currently trades at $2.37, up 16% in the past seven days. 

However, BeInCrypto’s assessment of its on-chain data reveals that this rally may be primarily driven by speculative trading activity. New demand for XRP has plummeted during the review period, making it likely that its price would reverse its current upward trend.

Ripple’s Declining New Addresses Highlight Lack of Fresh Demand

According to Santiment, the daily count of new addresses created to trade XRP has plunged 32% over the past seven days. Interestingly, the token’s price has climbed by double digits during that period.

When an asset’s price rises, but the number of its new addresses declines, it suggests that the price increase is driven more by speculative traders rather than new participants entering the market. This indicates a lack of fresh demand for the asset, signaling a speculative rally that may not last.

XRP Network Growth. Source: Santiment

Moreover, the drop in XRP’s Network Realized Profit/Loss supports this bearish outlook. Per Santiment, since it climbed to $1 billion on January 1, the metric’s value has dipped by 99%. At press time, this is at $10.48 million.

A coin’s Network Realized Profit/Loss measures the difference between the price at which the asset was last moved or sold and the current market price. It tells us how much profit or loss is “realized” by users on the network. 

XRP Network Realized Profit/Loss. Source: Santiment

When it falls during a price rally, this suggests a speculative or illiquid market where holders are not actively selling. This may be because they expect further price increases or are hesitant to realize gains. Nevertheless, this trend indicates that the price surge is not supported by strong market participation. It suggests that the price rise is unsustainable as it is not accompanied by high demand for the asset.

XRP Price Prediction: Can It Maintain Its Gains Amid Low Demand?

At press time, XRP trades at $2.37. The token’s 16% rally over the past week has pushed its price above the upper line of a descending parallel channel.

However, with low demand for XRP, it may struggle to sustain these gains and could reverse course. In such a case, the price may slip back within the channel, trending toward support at $1.88.

XRP Price Analysis. Source: TradingView

Conversely, a surge in buying activity would invalidate this bearish outlook. In that scenario, XRP’s price could extend its gains and reclaim its multi-year high of $2.90.