XRP has struggled to keep pace with the broader cryptocurrency market rally that began last week after the Federal Reserve cut interest rates.

While other cryptocurrencies posted impressive gains, XRP only managed to achieve a modest gain of 2%. Analysts and investors suggest that this needy performance is due to growing interest in other projects, diverting attention and capital from the token. Moreover, user participation in the XRP Ledger blockchain has declined, raising questions about the long-term prospects of the project.

Key data from analytics firm Santiment reveals a noticeable decline in user engagement with Ledger, contributing to a sense of anxiety among investors. As other altcoins post double-digit gains, fear and uncertainty are growing within the XRP community.

Investors are currently looking for signs of a trend reversal, but until the price regains user interest and gains momentum, it runs the risk of falling further behind in this bullish market cycle. As the market shifts, all eyes are on XRP to see if it can overcome these challenges and join the broader cryptocurrency rally.

XRP faces solemn risks

XRP is trading below the critical $0.60 level, a psychological level that has acted as resistance for the past few months. Despite the recent rally in the cryptocurrency market, XRP is showing signs of potential retracement. While the altcoin initially benefited from broader bullish sentiment, fading market signals suggest it may soon struggle to maintain that momentum.

One disturbing indicator is the decline in user engagement with the XRP Ledger blockchain. Key metrics from Santiment show that the XRP daily lively address (DAA) price divergence dropped to -74.46% yesterday.

DAA Price Variance measures whether user share increases with price. A falling DAA, especially when the price is rising, is a bearish signal because fewer users are interacting with the network despite the price enhance. This discrepancy suggests that the recent upward trend may be feeble and unsustainable.

If XRP continues to struggle and fails to close above the $0.60 resistance, a more severe downturn could occur. The altcoin could experience a deep correction, potentially falling to lower demand levels around $0.55. Investors are currently closely monitoring the XRP price action to see if it manages to reclaim the $0.60 level and regain momentum, or if further declines are on the horizon.

Price levels to view

XRP is trading at $0.589 after two weeks of sideways movement, swinging between $0.57 and $0.59. Despite several attempts, the price has failed to break above the key resistance level at $0.60, putting it at risk of a downside. XRP is currently trading about 6% above its 200-level daily moving average (MA) of $0.548 – a critical support that has provided stability in the past.

To gain bullish momentum, XRP needs to break the $0.60 barrier and pursue higher supply levels around $0.65. The move would signal renewed strength and potentially trigger a more solemn surge. However, current price action appears feeble, with narrow upward momentum. If XRP fails to hold above the $0.60 level, a retest of lower demand zones around $0.55 is expected.

The worst-case scenario for XRP would be an extended period of this sideways range, with no decisive breakout in either direction. Such prolonged consolidation can enhance selling pressure, causing the price to fall.

Investors and analysts are closely watching whether XRP will be able to reclaim the $0.60 level, start a modern uptrend, or face further declines.

Featured image from Dall-E, chart from TradingView