XRP’s (XRP) recent drop toward $2 may be exacerbated by a significant decline in transaction fees, a development that analysts suggest could fuel a deeper price correction.
Key indicators highlight this trend:
- •XRP transaction fees have fallen to approximately 650 XRP per day, a level not seen since December 2020.
- •Technical analysis suggests a descending triangle pattern on XRP’s chart, targeting a price of $1.73.
XRP Transaction Fees Reach Five-Year Lows
On-chain data provider Glassnode has reported a substantial decrease in the total daily transaction fees on the XRP Ledger (XRPL) since the start of the year.
The total fees paid daily on XRP have plummeted to around 650 XRP per day, a stark contrast to the 5,900 XRP per day recorded on February 9. Glassnode highlighted this 89% decline, noting that these fee levels were last observed in December 2020.
This reduction in transaction fees coincides with a sharp decrease in XRP’s futures open interest (OI). Open interest has fallen from 1.75 billion XRP in early October to 0.74 billion XRP, representing a 59% flush-out.
Furthermore, funding rates have dropped to 0.001% from approximately 0.01% (7D-SMA). This combination of declining open interest and funding rates suggests a waning confidence among derivatives traders regarding XRP’s immediate recovery prospects.
While social sentiment toward XRP has recently dipped into the “fear zone,” reaching levels not seen since early October, some analysts believe such a downturn could precede a significant rally in XRP’s price, as has occurred in the past.
XRP’s Descending Triangle Targets $1.73
Technical analysis of the XRP/USD pair also indicates a potential for further downside if the price completes a descending triangle pattern.
Current chart patterns suggest increased downside risk if XRP breaks below the triangle’s support line, currently situated at $2.
The measured target for this pattern, calculated by adding the triangle’s height to the breakout point, suggests a potential price of $2.20. This implies a possible decline of 15% from the current price levels.
The price range between $2 and $1.98 is identified as a critical support zone for XRP. Maintaining this level is considered essential to prevent further losses, with a break below potentially leading to a decline toward $1.61.