Ripple’s native token, XRP, is currently experiencing heightened whale activity, a significant factor in influencing its price movements. Last week, whales—wallets holding over $5 million worth of XRP—accounted for a staggering 55% of the token’s total supply. With such concentrated holdings, the market becomes more prone to volatility, making XRP susceptible to dramatic price swings, like the one witnessed on July 10, 2023.
Whale Concentration – A Recipe For Volatility
XRP has been in a consolidation phase for several months, unable to break past the $0.70 resistance level since August 2023. This stagnation suggests that the token is facing significant selling pressure, especially from short-term traders looking to capitalize on any minor price movements. Whale activity has historically played a role in this scenario, leading to unexpected price fluctuations that can be both advantageous and disastrous for everyday traders.
One of the most notable developments occurred on September 2, when XRP’s dormant circulation witnessed its largest spike in over a year. Dormant circulation refers to previously inactive tokens that are suddenly being moved. The last time such a surge occurred was in June 2023, and shortly after, XRP saw a 12.18% drop in its price, sliding from $0.572 to $0.502.
This recent activity has sparked concerns that XRP may be heading for another price correction, as historically, a spike in dormant circulation precedes a market pullback. However, the token’s price has remained relatively stable in the past few weeks, adding to the speculation that XRP is consolidating rather than preparing for a dramatic rise or fall.
While Ripple’s development activity continues to move forward, it remains lower than other large-cap tokens like Cardano (ADA). Despite this, XRP’s daily active addresses have remained stable, signaling steady network engagement. However, this steadiness hasn’t translated into price momentum.
XRP’s leverage ratio, which spiked alongside prices in mid-July, has since quieted down. This lack of leveraged positions indicates that traders are not yet ready to take significant risks in the market, further solidifying the idea that XRP is in a consolidation phase.
Capital Flow and Market Sentiment
In September, the mean coin age—an indicator of how long tokens remain in wallets—dropped, signaling increased token distribution. However, the slowdown over the past two weeks, coupled with a rise in mean coin age, suggests that this distribution may be losing momentum. The mean dollar invested age (MDIA), which measures how stagnant investments are, also saw a sharp decline. Typically, a downtrend in MDIA indicates that investments are flowing back into circulation, pointing to a potential increase in network activity and a favorable setup for price appreciation.
Also Read: XRP Lawsuit Nears Critical October Deadline – 70% Of Community Believes SEC Won’t Appeal
Is XRP Primed for a Breakout?
Although the spike in dormant circulation may signal a potential correction, the broader on-chain metrics hint that XRP could be setting the stage for a breakout. With the mean coin age trending higher and the MDIA decreasing, XRP’s network activity is increasing, a positive sign for future price movements. However, the absence of significant leverage positions suggests that traders are still cautious.
As Ripple continues its legal battles and development efforts, XRP remains a volatile asset, heavily influenced by whale activity and broader market trends. For now, all eyes are on whether the current consolidation phase will lead to a breakout or another correction in the coming weeks.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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