The number of on-chain Ripple (XRP) transactions on the XRPL is down 65% from 2.5 million on March 19 to less than 900,000 on May 14, 2023.
XRP Transactions Crashing
As of May 14, 2023, 852,000 transactions were processed by the XRPL, a decentralized blockchain network by Ripple Labs curated for fast value transfer. This represents a 65% drop from March 19 peak when the total number of transactions on the XRPL stood at over 2.5 million.
Notably, there has been no solid technical reason, such as blockchain or node vulnerability in the XRPL, during this period to explain the contraction in transaction count.
However, what’s evident is that the crypto market has been under pressure in the last two months from March to May 2023. This might have contributed to the drop in the number of on-chain transactions.
On March 29, XRP prices peaked at around $0.58. This was 10 days after the XRP transaction count surged to the highest level on March 19. From the second half of March, however, transaction count and XRP prices have been falling.
XRP prices are down 27% to $0.42 as of writing on mid-May, down from $0.58 registered on March 29. However, whether XRP prices will continue to track lower, mirroring the number of XRPL transaction count, remains uncertain.
Overall, the number of on-chain transactions can directly influence transaction fees and prices. Moreover, it can provide insight into the level of demand for the cryptocurrency and the blockchain network. The more demand for the underlying network’s token, the higher the trading volumes, and this upsurge can influence prices.
On the XRPL, users pay fees using XRP. Therefore, the higher the demand for XRP in transaction settlement, the more upward pressure there will be for the native currency.
The contraction in the number of XRP transactions is at the back of declining prices. Nonetheless, it should be noted that the drop in XRP prices wasn’t an isolated event. Like the other crypto prices, XRP and top coins, including BTC and ETH, have been retracing from recent peaks registered in March and April 2023.
As an illustration, after surging to as high as $31,000, BTC prices have since dropped, falling to as low as $25,800 on May 12.
Meanwhile, XRP is currently trading at $0.41, down from $0.58 posted in late March 2023.
The SEC-Ripple Case
The drop in XRP transaction count can also be due to market sentiment as the community monitors the ongoing SEC-Ripple case which might end this year.
The United States Securities and Exchange Commission (SEC) sued Ripple’s executives in December 2020 for conducting an illegal initial coin offering and using XRP to raise funds, breaking federal security laws. In their assessment, the regulator says XRP is an unregistered security.
Depending on the Judge’s ruling in the coming month, the outcome of the suit may impact not only the XRP and activity on the XRPL but also influence how regulators perceive crypto in the United States.