Summary
⚈ Tightened Bollinger Bands suggest incoming volatility; supply unlock may limit upside
⚈ Upcoming SEC meeting could offer clarity on Ripple case and boost investor sentiment
XRP’s network activity, a measure of unique wallet addresses involved in successful transactions, saw a sharp increase from April 11 to April 20.
Namely, the metric marked a 67.50% surge in the aforementioned timeframe, per data from cryptocurrency market intelligence platform GlassNode shared by technical analyst Ali Martinez.
In the specified period, the price of XRP shot up by 6.09%, from $1.97 to $2.09. By press time on April 23, the token was trading at $2.26, having made an additional 8.13% move to the upside, with year-to-date (YTD) returns standing at 8.82%.
In tandem with this, Martinez recently noted a significant drop in new XRP addresses, as covered by Finbold on April 20. Therefore, we can surmise that the recent rally was not caused by an influx of new traders.
XRP network activity increase is just one bullish signal currently at play
Beyond the XRP network activity increase, the technical analyst also highlighted that Bollinger Bands (BB), which measure potential price movements, have tightened, indicating that XRP could see increased volatility going forward.
With that being said, supply and demand dynamics could dampen the momentum of the current bull run.
Ripple Labs is scheduled to unlock 1 billion XRP on May 1, and the increase in circulating tokens might moderate future moves to the upside.
However, historically, unlocks have not resulted in major supply disruptions — and as the cryptocurrency market is currently seeing large inflows, XRP seems set to move closer to its next crucial resistance level at $2.40.
Moreover, as XRP’s open interest is near 1-year lows, recent price action trending upward is not the result of derivatives trading — rather, the most likely reason is increased spot trading.
Lastly, a closed-door Securities and Exchange Commission (SEC) meeting on April 24 could bring new clarity as to when the Ripple v. SEC case will reach a definitive conclusion, which could provide an additional bullish catalyst.
Featured image via Shutterstock
