YEREVAN (CoinChapter.com) — Did you know XRP is among the only senior cryptocurrencies that have failed to retest the record high of its 2017-2018 bull cycle? On the other hand, its rivals, mainly Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), and whatnot, have not even achieved their previous record highs but surpassed them by larger margins.
It is clear that traders and investors do not find XRP as attractive as its peers. The cryptocurrency, despite its occasionally amazing fundamentals and hardcore online communities, has not been able to cash in on even the most bullish trends in recent years. For instance, XRP is up by a mere 1.5% year-to-date compared to Bitcoin’s 70% rally in the same period.
In this report, we focus on why most market participants have snubbed XRP in 2024 and the possibilities of a delayed but dazzling price rally.
Why is XRP Stagnant AF?
XRP’s growing stagnation compared to the rest of the market takes its cues from several factors. However, the key catalysts among them are the ongoing lawsuit between Ripple and the U.S. Securities and Exchange Commission (SEC) and XRP’s unique position case that — honestly writing — is not buzzy enough.
SEC vs. Ripple Drags On
Crypto traders and investors have snubbed XRP for its association with Ripple, a San Francisco-based blockchain payment company recently found guilty of raising funds from institutions by illegally selling them XRP tokens as securities. The same ruling also found that XRP sales to retail investors via public crypto exchanges made it a utility token.
The SEC vs. Ripple lawsuit will likely end in or after May 2024, following Judge Analisa Torres’ decision to extend the SEC’s deadline for filing remedies-related discovery materials. This phase involves presenting documents that outline possible legal actions and solutions within the case.
Our wild guess is that the SEC will not let go of Ripple that easily. Let’s not forget that the blockchain company remains the largest holder of XRP, managing over 45 billion tokens. Each month, it unlocks/sells a significant number of its holdings.
Ripple currently holds about 40.7 billion XRP in escrow for future circulation, with over 5 billion XRP available as liquid assets for sale. In a recent month, Ripple released 1 billion XRP from escrow, returning 800 million for later release and selling 260 million XRP, an increase of 60 million from their usual monthly sale.
Have a look at what these supply unlocks are doing to the XRP market:
Notably, XRP’s circulation supply has increased to 54.74 billion from 50.95 billion in a year, or 7.45%.
In comparison, Bitcoin’s circulation supply has jumped by a mere 1.7%.
XRP’s Use Case is Unusable For Investors
XRP’s inflationary nature detracts from its appeal as a store of value, although inflationary economics aren’t inherently negative if backed by solid utility.
Ripple launched XRP to facilitate fast and low-cost international money transfers, establishing it as a “bridge currency” for banks and financial institutions. This use case, however, also ties XRP’s value directly to its adoption by the traditionally cautious and slow-to-adopt blockchain technology financial sector.
Unlike its DeFi competitors, XRP lacks a staking feature, and its underlying blockchain, the XRP Ledger (XRPL), does not support NFTs, limiting its utility in emerging blockchain sectors. In turn, that leads to relatively lower demand for the crypto among the most potential blockchain users.
Is XRPL — AHAM — Centralized?
The XRPL network structure is different from other blockchain networks. It features a core group of 35 validators in its so-called Unique Node List (UNL). In addition, the XRPL blockchain hosts approximately 740 nodes.
However, unlike the UNL bosses, these nodes cannot participate in amendment voting or the transaction consensus mechanism. Instead, their tasks include relaying information and executing other network-specific functions.
The number of validators and their nodes is relatively too low compared to other blockchains boasting hundreds of thousands of participants. Aside from that, XRPL does not offer any financial reward to its network participants, indicating that the operational cost of running its node or validator mechanism is negligible.
Excerpts from the official website:
“The XRP Ledger does not provide a direct economic incentive for contributing to the consensus process by running a validator. Other blockchains offer direct incentives such as rewards from mining and staking or trading advantages. Instead, the lack of direct incentives for XRP Ledger validators attracts natural stakeholders.”
This further limits XRP’s organic demand against its ever-increasing circulation supply.
XRP Price Analysis — Should You Buy or Sell The Ripple Crypto in 2024?
New and experienced XRP traders can study its potential directional bias in 2024 using a trinity of fundamental, on-chain, and technical analysis methods. Let’s discuss.
Fundamental Analysis 2024
A potential settlement in the ongoing SEC vs. Ripple lawsuit may leave XRP with room to grow in May 2024. Not to mention, the Bitcoin market will likely be coming out of the ETF inflows and halving FOMO in the same month, raising the potential of capital rotations into the XRP market.
For instance, the XRP/BTC exchange rate is already at its three-year low as of March, making the pair technically oversold. It’s an ideal area for traders to exchange their overpriced Bitcoin for an underpriced XRP, which, in turn, could boost its prices in U.S. dollar terms.
Gaining clarity over XRP’s status also boosts the possibility of Wall Street firms like BlackRock proposing an exchange-traded fund for the crypto. The speculation has already picked momentum after Ripple CEO Brand Garlinghouse’s with Bloomberg TV, wherein he admitted being open to a spot XRP ETF.
As a result, XRP’s fundamental outlook seems mildly bullish after May 2024.
On-Chain Analysis
Limited use cases of XRPL look evident in its chain’s transaction volumes. Barring a spike in January 2024, which appeared amid the rumors of an XRP ETF launch, XRPL’s transaction volumes have been more or less stable in recent years, as shown below.
Meanwhile, the XRP whale data is disappointing. It shows that the number of the cryptocurrency’s richest investors — those holding more than 100,000 XRP — is declining rapidly in 2024. This indicates two scenarios: whales dumping or distributing their XRP holdings.
On the other hand, XRP’s social media presence continues to strengthen, indicating retail interest despite the setbacks above.
XRP Technical Analysis 2024 — Triangle of Sadness
XRP price is stuck in its own Triangle of Sadness. The Ripple crypto has bounced between a symmetrical-shaped triangle range since December 2017. But it will reach the triangle’s apex point — where the upper and lower trendlines converge — in 2024.
Till then, traders can anticipate the XRP price to reach the triangle’s upper trendline near $0.77 by May or June 2024, coinciding with its 0.236 Fibonacci retracement level. Nonetheless, this rise risks following up with a strong bearish reversal toward the lower trendline near $0.50, aligning with XRP’s 200-week exponential moving average (200-week EMA; the blue wave).
A breakout could send XRP toward the 0.382 Fib line near $1.16, up more than 90% from the current price levels. Conversely, a breakdown below the lower trendline could mean a sharp drop toward $0.30, a support level from the June-August 2022 and November-December 2022 period.
