On May 30, the value of XRP increased by 6% to reach $0.51, with the market focus shifting toward the recent upsurge in XRP network activity.
According to data from Santiment, the XRP network has experienced a notable surge in its daily active addresses (DAA), which refers to the number of unique addresses engaged in XRP transactions on a daily basis. Specifically, on May 27, approximately 490,000 addresses interacted with the XRP network, representing the second-highest level of address activity on the XRP blockchain, following its record DAA count of 880,000 established just three months prior.
It is noteworthy that the surge in daily active addresses (DAA) to its record high in March was followed by a 45% increase in the price of XRP. This pattern, or fractal, may have led traders to engage in speculation regarding a possible comparable upward movement in price following the recent rise in DAA count.
The market perceives a surge in the daily active addresses (DAA) indicator as a positive signal for the relevant token, while a decline in DAA is viewed as negative. However, it is worth noting that the DAA indicator has been shown to be imperfect in the past. For example, the spikes in XRP’s DAA count between November 2021 and April 2022 coincided with a decline in the token’s price, as illustrated in the chart below.
XRP’s potential for a decline persists, primarily due to the uncertain macroeconomic outlook that could negatively impact the broader cryptocurrency sector.
From a technical perspective, XRP may experience a drop in the upcoming weeks as the token undergoes a retest of its multi-month horizontal trendline resistance, which could lead to a potential pullback of up to 20%.
In the event of a pullback, XRP’s primary downside target could be its multi-month ascending trendline support, potentially leading to a price drop of approximately 20% to $0.40.
On the other hand, a breakout above the horizontal trendline resistance could activate an ascending triangle reversal breakout, propelling the XRP price toward $1, as depicted in the chart below.
The possibility of Ripple emerging victorious in the ongoing legal battle against the U.S. Securities and Exchange Commission (SEC) could serve as a catalyst for the aforementioned breakout movement.
