XRP price has recoiled this year as the crypto winter has accelerated. This consolidation may lead to more downside as the token has formed a risky pattern amid weak on-chain and ecosystem metrics.
XRP Ledger network is struggling
From a distance, the XRP token has some good fundamentals, especially as the ETF inflows jump this year and Ripple Labs continues doing well. Just last year, Ripple Labs raised cash from Citadel and Fortress at a $40 billion valuation. Today, this figure stands at over $50 billion.
Ripple Labs has moved to establish itself as a major player in the custody and prime brokerage services, helped by its acquisition of Hidden Road and GTreasury.
It has recently received a provisional bank charter in the United States and licenses from over 70 countries.
While all these are good signs for Ripple, the reality is that the gains are not happening for the XRP token and XRPL.
Data shows that the network continues to struggle in key areas. For example, the XRP Ledger made just $34,000 in fees this month, a tiny amount for a crypto project worth over $80 billion. It made $75k in the first quarter, down from $128k in the previous quarter.
This performance is happening because of its relatively weak ecosystem. For example, its DEX networks handled over $453 million in volume in the first quarter, down from $562 million in the previous one.
In contrast, Ethereum and Solana handle billions in transactions a week. Hyperliquid is handling billions of dollars a day.
More data shows that the network has a total value locked (TVL) of over $48 million in the decentralized finance (DeFi) industry, a fraction of the amount in other chains like Solana and Monad.
Meanwhile, its market share in the stablecoin industry is mixed. While Ripple USD (RLUSD) is one to the top biggest regulated stablecoin with $1.4 billion in assets, only $381 million of it is in XRP Ledger. The rest, which is the most active, is on Ethereum.
According to XRPScank, the number of payment transactions on the XRP Ledger has dropped to 212,856 a day, down from millions a few months ago. The number of active users has also continued falling and currently stands at 168k.
Most notably, the XRP burn rate has continued falling, with the network burning just 400 tokens worth less than $600 a day.
XRP price technical analysis
Ripple price chart | Source: TradingView
The weekly timeframe chart shows that the XRP token remains under pressure this year and is on the verge of a strong bearish breakdown in the near term.
It has moved below the 61.8% Fibonacci retracement level, confirming the bearish breakdown. Also, it is into the process of forming a bearish pennant pattern, which is made up of a vertical line and a symmetrical triangle pattern.
The coin is about to form a mini death cross as the spread between the 50 and 100-week moving averages narrow.
Therefore, the most likely XRP prediction is bearish, with the next key target to watch being at $1. A move below that level will point to more downside in the near term.
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