XRP Sees $11M Inflow, 256% Options Volume Surge, But On-Chain Activity Drops 58%

XRP, the cryptocurrency associated with Ripple, has seen a significant inflow of $11 million, which initially indicated a bullish outlook for the altcoin. This capital influx was accompanied by a technical pattern that suggested a potential price rally. At the time of writing, XRP's price was forming an inverted head and shoulders pattern, which typically precedes a major rally with the price trending higher soon after. This pattern, emerging on the altcoin’s 4-hour timeframe, could potentially drive the asset to rally up to $2.50, a level last reached on March 24.

Options traders have also contributed to the growing bullish sentiment, with volume surging by 256% in the last 24 hours. Option Open Interest spiked to $220,860 as more traders opened new positions, likely to buy contracts. Spot market traders have mirrored this bullish sentiment, purchasing $11 million worth of XRP from exchanges and moving the assets into private wallets. This notable acquisition followed by transfers to private wallets implies conviction among investors. If this pattern continues, it could lead to a supply squeeze in the market.

However, despite the bullish market position on the charts and among options and spot traders, the setup may be dampened by low on-chain activity. A drop in key on-chain metrics, specifically the executed transaction count and active accounts, might slow down the rally. The executed transaction count plunged from 1.56 million to 660,000 in the last 24 hours, implying fewer transactions involving XRP. Active accounts, particularly senders, have also declined sharply—from a high of 20,700 to 8,500. This finding indicated fewer traders on-chain.

If these metrics continue to fall without a significant hike in activity, XRP’s move to the upside will be at risk. The discrepancy between the capital inflow and the on-chain activity highlights a potential challenge for XRP traders. The weak on-chain activity suggests that the underlying network usage and transaction volume may not be sufficient to support a sustained price rally. This could lead to a more cautious approach among traders, who may need to consider additional factors beyond short-term inflows when assessing the cryptocurrency's price trajectory.