XRP's Price Trajectory: Navigating Conflicting Bearish and Bullish On-Chain Signals

XRP's price trajectory in 2025 has been a tug-of-war between bullish technical upgrades and bearish on-chain demand dynamics. While the XRP Ledger (XRPL) has seen surges in decentralized finance (DeFi) adoption and institutional integration, declining wallet creation and whale sell-offs have cast a shadow over its long-term prospects. This analysis dissects the conflicting signals to assess whether XRP is undervalued or overhyped.

Bullish Technical Patterns: A Foundation for Growth

The XRPL's technical evolution has been a key driver of optimism. Ripple's integration of an EVM-compatible sidechain in Q3 2025 unlocked Ethereum-style smart contracts, enabling 1,400 new DeFi applications within a week of deployment XRP Whale Accumulation Signals Undervalued Market Potential^[1]. This upgrade, coupled with the rise of RLUSD (Ripple's USD-pegged stablecoin), has diversified XRP's use cases beyond cross-border payments. For instance, DEX volumes on the XRPL grew by 21% month-over-month in Q3, driven by RLUSD's $90 million market cap XRP Whale Accumulation Signals Undervalued Market Potential^[1].

Institutional confidence is another tailwind. Ripple's $1.25 billion acquisition of Hidden Road to integrate XRP into traditional financial products and its push for a U.S. banking license signal a strategic pivot toward mainstream adoption XRP Experiences High Volatility Due to Coinbase Allegations and …^[2]. Meanwhile, Kraken's $706 million XRP transfer in September 2025—interpreted as a move to meet user demand—further underscores institutional bullishness XRP Has a Lower Dormancy Rate than Bitcoin and Ethereum: Report^[5].

Bearish On-Chain Dynamics: A Cautionary Tale

Despite these positives, on-chain metrics tell a more nuanced story. While daily spot trading volumes hit $16 billion in Q1 2025, broader blockchain activity has declined. New wallet creation dropped by 40.28% year-to-date, and daily blockchain transaction volume fell 86% compared to six months prior XRP on-chain metrics - XRP Authority^[4]. This divergence suggests that retail adoption is lagging, with most activity concentrated in institutional hands.

Whale behavior exemplifies this duality. Large holders (10M–100M XRP) accumulated 310 million tokens in Q3 2025, pushing their total holdings to 8.11 billion XRP XRP Whale Accumulation Signals Undervalued Market Potential^[1]. However, mid-sized whales (1M–10M XRP) reduced their holdings by 0.27% of total supply, while larger wallets (100M–1B XRP) saw a 0.5% decline Will XRP extend decline to $2.5 as whales sell in September?^[3]. These sell-offs, totaling over $2 billion, coincided with a 31% price drop for XRP in September 2025 XRP Experiences High Volatility Due to Coinbase Allegations and …^[2].

A notable anomaly occurred on August 18, 2025, when the XRPL processed 844.5 million XRP transactions—a 500% spike compared to the previous day XRP on-chain metrics - XRP Authority^[4]. While this highlights the ledger's scalability, it also raises questions about whether such surges are driven by speculative trading rather than organic demand.

The Dormancy Paradox: Active vs. Inactive Supply

XRP's dormancy rate offers a counterintuitive insight. Only 15.8% of XRP's circulating supply has been inactive for over a year, significantly lower than Bitcoin and Ethereum XRP Has a Lower Dormancy Rate than Bitcoin and Ethereum: Report^[5]. This suggests a more active ecosystem, with 49.8% of wallets transacting in the past year and 6.7% moving funds in the last 30 days XRP Has a Lower Dormancy Rate than Bitcoin and Ethereum: Report^[5]. However, the concentration of activity among whales—98.6% of wallets holding 1M+ XRP were active in the past year—indicates that retail participation remains limited XRP Has a Lower Dormancy Rate than Bitcoin and Ethereum: Report^[5].

Regulatory Uncertainty: The Wild Card

The SEC's delayed decision on an XRP ETF has created a regulatory overhang. While Ripple's legal battles have largely been resolved, the absence of a clear framework for token classification in the U.S. continues to deter institutional investors XRP Experiences High Volatility Due to Coinbase Allegations and …^[2]. This uncertainty contrasts with the token's technical progress, creating a tug-of-war between innovation and compliance.

Conclusion: A Tipping Point for XRP

XRP's price trajectory hinges on resolving the tension between technical optimism and on-chain caution. The XRPL's DeFi capabilities and institutional adoption provide a strong foundation for long-term growth, but declining retail adoption and whale volatility pose near-term risks. For investors, the key will be monitoring whether whale accumulation translates into broader ecosystem participation or remains a niche phenomenon.

If the EVM-compatible sidechain and RLUSD adoption can drive organic demand—rather than speculative trading—XRP may yet prove its undervaluation. But until wallet creation and retail activity rebound, the bearish narrative of a “token for whales, not the masses” will persist.