Ripple’s Transaction Surge: Impact on XRP Price Explained

This week, Bitwise established a trust entity named “XRP ETF” in Delaware. The following day, the asset manager submitted an S-1 form to the US Securities and Exchange Commission, a vital procedure for companies that wish to introduce a new security and list it on a public stock exchange.

Consequently, the excitement surrounding a potential XRP ETF has led to a significant surge in the crypto asset’s on-chain transaction volume.

Market Risks Amid Rising XRP Enthusiasm

The transaction volume soared to $2.39 billion, marking the highest level in eight months, as reported by the crypto analytics platform Santiment’s latest report. This points to heightened trader activity and potential institutional accumulation.

Recent data indicates that XRP’s 30-day MVRV (which tracks the average returns of traders over the last month) has declined to -9.2%, the lowest in two months. Historically, such negative sentiment and low returns may represent an “opportunity zone” where the market is under pressure, yet downside risk is minimized. This is often a crucial moment for seasoned investors to start accumulating, anticipating a recovery as market sentiment improves.

Additionally, October 1st recorded 145 whale transactions exceeding $1 million, the most in six months. This increase in whale activity implies that larger investors are either buying XRP or positioning themselves for a strategic move. Such substantial transactions frequently precede market changes and can serve as important indicators for smaller traders seeking direction.

The sentiment on social media regarding XRP has shifted significantly to a bullish stance, with the ratio of positive to negative comments reaching its peak on October 1st, following the news of Bitwise’s ETF filing and ahead of the ETP filing.

Despite this notable shift toward bullish sentiment for XRP, Santiment cautioned that markets often move contrary to crowd sentiment, especially during times of high enthusiasm.

“In terms of price, the initial excitement drove up XRP’s value, but as witnessed in the past with Bitcoin and Ethereum ETFs, enthusiasm can be fleeting if prices decline after the initial announcements, the SEC’s decisions on the filings are delayed, or actual adoption fails to meet investor expectations.”

Even with whale activities, increased transaction volumes, and negative average returns indicating a possibly bullish outlook, the expected rally might take place only after market enthusiasm wanes and traders face disappointment or impatience. Ironically, the price surge that traders are hoping for may only become a reality once crowd sentiment decreases.

Ripple Prepares for SEC Appeal

This filing emerges at a crucial juncture for XRP and Ripple. On Wednesday, the SEC revealed its plans to appeal a federal judge’s ruling in the ongoing case against Ripple.

Over a year ago, the ruling stated that while the San Francisco-based blockchain company’s institutional XRP sales violated federal securities laws, its programmatic sales to retail exchanges did not. The SEC’s attempt to initiate an interlocutory appeal against the summary judgment was dismissed by the judge.