Weak demand and rising supply could trigger a downtrend

• XRP’s price and on-chain activities have remained stagnant, even in light of positive developments with the SEC dropping its appeal against Ripple.
• The increasing supply of XRP may exert downward pressure on its price if demand does not rise.
• If XRP confirms a Head and Shoulders pattern, it may risk a further drop to $1.35.

XRP has fallen by 7% on Friday, influenced by bearish macroeconomic conditions, including U.S. President Donald Trump’s tariff threats and escalating inflation in the U.S. This downward pressure may intensify if XRP’s on-chain activities do not increase alongside its growing supply.

XRP on-chain metrics remain muted as supply increases

XRP, like many cryptocurrencies, has been significantly affected by the recent tariff threats, experiencing a decline of 35% from its high of $3.40 in January. This stands in stark contrast to its performance during the last quarter of 2024 to early this January, when it surged by over 500%.

The announcement regarding the SEC’s decision to withdraw its appeal against Ripple did not lead to a surge in XRP’s price, as it remained flat. This outcome had largely been anticipated by investors, especially since the new SEC administration has ended several legal disputes involving crypto companies.

It is uncertain whether XRP will replicate its previous quarter’s performance in the ongoing cycle, particularly with the absence of primary tailwinds affecting its price and a decline in on-chain activity.

Whale investors have reduced their activity, with transaction counts trending back to levels seen before the U.S. elections.

XRP whale transaction count

Moreover, XRP exchange reserves on platforms like Binance and Upbit—home to the largest XRP supply—have remained relatively steady since the beginning of March, indicating limited accumulation or distribution activity surrounding the token.

On the derivatives front, XRP’s open interest has shown signs of recovery, climbing to 1.75 billion XRP from a monthly low of 1.35 billion XRP, according to data from Coinglass.

However, XRP may face downward pressure from its supply side if demand does not improve in the upcoming months. Ripple unlocks 1 billion XRP from its escrow each month, and approximately 33% of the unlocked supply typically gradually reaches the market. This is evident in the annual growth of its circulating supply, which has surged from 54 billion to 58 billion XRP.

XRP circulating supply growth

XRP may drop to $1.35 if it confirms the Head & Shoulders pattern

XRP has experienced $24.89 million in futures liquidations over the past 24 hours, as per Coinglass data. The total liquidations include $23.63 million from long positions and $1.26 million from shorts.

The remittance-focused token has dropped below its support level near $2.34, recording a 7% loss on the day.

If XRP slips below the $1.96 support level—which lies just beneath the psychological barrier of $2.00—this could confirm a Head and Shoulders (H&S) pattern, potentially driving the price down to the $1.35 support level.

Conversely, XRP may rebound off the $1.96 support, as bulls have defended this level on six separate occasions since establishing a rally above it last December.

XRP/USDT daily chart

The Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) have both dipped below their neutral thresholds, indicating increasing bearish momentum.

A daily close above $2.60 would invalidate the current bearish thesis and might propel XRP toward the $2.78 resistance level.