XRP Circulation Hits 5-Year Low as Price Struggles Against Key Resistance
XRP has been facing persistent challenges in breaking past a crucial resistance level, leaving investors uncertain about its short-term potential. Despite multiple recovery attempts, the altcoin remains unable to sustain momentum beyond the $2.56 mark, while circulation data suggests dwindling market activity.
Declining XRP Circulation Signals Weak Investor Interest
Recent data indicates that XRP’s circulation has dropped to its lowest level in five years, reflecting a sharp decline in transaction activity. The velocity of XRP—the rate at which the asset is traded—has not been this low since January 2020, raising concerns among market participants.
A drop in circulation is often interpreted as a sign of investor hesitation, as fewer transactions typically indicate reduced confidence in an asset’s potential for growth. This stagnation suggests that XRP holders are choosing to hold onto their tokens rather than actively trade, reinforcing bearish sentiment in the market.
Market Indicators Reflect Bearish Outlook
XRP’s broader market trend remains weak, with technical indicators confirming the lack of momentum. The Chaikin Money Flow (CMF), a measure of capital inflow and outflow, has fallen to a four-month low and remains in negative territory. This signals that investors are reluctant to inject fresh capital into XRP, further limiting the possibility of a price breakout.
With buying pressure diminishing, XRP’s potential for a strong rebound appears slim. Until market conditions improve and investor confidence returns, the asset may continue to struggle in its current range.
Can XRP Break Through Resistance?
Currently trading at $2.36, XRP has repeatedly failed to overcome the $2.56 resistance level, a critical price point that has acted as a ceiling for the asset in the past. Without a successful breakout, XRP risks further decline, with potential support levels at $2.27 and $2.14. If bearish sentiment persists, these levels could be tested in the near future, prolonging the consolidation phase and eroding recent gains.
The only way for XRP to reverse its bearish trajectory is to break above the $2.56 barrier and establish it as a new support level. A decisive move above this resistance could pave the way for a rally toward $3.00, recovering some of the losses incurred earlier in the year. However, such a shift would require a notable improvement in investor sentiment and broader market conditions.
XRP’s market struggles are compounded by a significant decline in circulation and weak technical indicators, both of which suggest a challenging road ahead. Until investor confidence returns and transaction activity picks up, the altcoin is likely to remain in a consolidation phase, with a downside risk if bearish pressure intensifies. For XRP to regain momentum, it must first overcome the $2.56 resistance level—a crucial hurdle that could dictate its future trajectory.