The XRP Ledger recently processed 3 million transactions in a single day, a milestone some analysts link to Ripple’s strategic partnerships. This surge in on-chain activity has ignited discussion about a potential “supply squeeze” that could benefit XRP’s price, especially as the token’s RSI indicates oversold conditions similar to late 2022. However, scrutiny of the network’s DeFi health reveals a nearly 12% weekly drop in stablecoin market cap, casting doubt on the sustainability of the transaction growth and the likelihood of a major price reversal.
The XRP Ledger (XRPL) recently hit a milestone of 3 million daily transactions. Analysts are pointing to Ripple’s strategic partnerships as a key driver for this surge, suggesting increased usage could create bullish pressure.
Market observers note that high transaction volume generates fees, and when those are burned, the circulating supply drops. This dynamic, known as a supply squeeze, can sometimes precede upward price action for the asset.
Technical analysis adds to the discussion, as one analyst highlighted XRP’s oversold RSI at press time. For context, the RSI last hit similar levels in December 2022 during the bear market.
Soon after, XRP rallied by nearly 60% until the end of Q1 2023. This historical pattern leads to questions about whether XRP’s 25% correction this year represents undervaluation.
Ripple’s recent partnerships aim to position XRPL as a DeFi settlement hub bridging traditional finance and decentralized networks. Stablecoins are crucial for providing the liquidity needed to fuel these cross-chain transactions.
However, data from DeFiLlama shows XRPL’s stablecoin market cap fell nearly 12% this week. It constitutes only about 0.116% of the broader $320 billion stablecoin market.
The market seems to be waking up to these limitations. Since stablecoins fuel most XRPL transactions, their declining momentum could restrain DeFi activity on the ledger.
This raises questions about whether Ripple’s partnerships can sustain the on-chain growth needed for a supply squeeze. The weak DeFi metrics suggest a 2022-style price reversal may be unlikely despite the recent transaction milestone.
