The XRP landscape is undergoing a pivotal moment, balancing between promising technical momentum and growing on-chain challenges. After a notable surge fueled by improving market sentiment and partial regulatory clarity, Ripple’s native cryptocurrency now faces headwinds as a recent court decision stalls legal progress and network usage indicators show concerning declines.
While price action remains resilient above key support levels, fundamental metrics suggest weakening demand. This divergence between market performance and underlying activity raises important questions about the sustainability of XRP’s current rally—and what lies ahead for investors navigating this complex environment.
SEC Settlement Motion Denied Over Procedural Concerns
A significant development in the long-running XRP lawsuit emerged when U.S. District Judge Analisa Torres rejected a joint motion from Ripple Labs and the U.S. Securities and Exchange Commission (SEC) to reduce a $125 million penalty to $50 million. The proposed settlement was contingent on the withdrawal of a prior court injunction, but the judge cited procedural irregularities that prevented her from granting an indicative ruling.
Judge Torres emphasized the court’s responsibility to ensure any agreement is “fair and reasonable” and aligned with public interest. She noted that years of litigation and judicial resources must be respected, underscoring the need for thorough review before finalizing any resolution.
“The District Court must determine whether the proposed consent decree is fair and reasonable,” Judge Torres stated, reinforcing the judiciary’s cautious approach even in mutually agreed settlements.
Despite the setback, Ripple’s Chief Legal Officer Stuart Alderoty confirmed the company remains committed to resolving the case constructively. He clarified that the denial does not undermine previous legal victories—most notably the 2023 ruling that determined secondary market sales of XRP do not constitute securities offerings. This precedent continues to support Ripple’s broader regulatory standing and bolsters confidence in XRP’s classification as a non-security digital asset.
XRP Price Maintains Support Amid Volatility
Following the court ruling, XRP demonstrated resilience in price, holding above $2.40 after briefly retreating from a weekly high of $2.65. The current trading range reflects market consolidation, with bulls attempting to regain upward momentum.
Technical analysis reveals several bullish signals. XRP has rebounded from the 0.618 Fibonacci retracement level, while the Relative Strength Index (RSI) remains above 50—indicating sustained buying pressure. Additionally, the Moving Average Convergence Divergence (MACD) continues to signal bullish momentum, supported by XRP trading above its 50-day, 100-day, and 200-day Exponential Moving Averages (EMAs).
These indicators align with optimistic XRP price predictions, with many analysts projecting a short-term target of $3.00 if bullish conditions persist. However, traders are closely monitoring key levels: immediate support at $2.40 and resistance near $2.65. A breakout above this resistance could re-energize the rally, whereas failure to hold support may open the door to a test of the $2.00–$2.25 range.
On-Chain Metrics Signal Weakening Network Demand
Despite favorable technical setups, fundamental data paints a more cautious picture. Network activity on the XRP Ledger has declined sharply, raising concerns about declining user engagement and real-world adoption.
According to Santiment, new wallet addresses dropped from nearly 16,000 in January to just over 3,400 by mid-May—a staggering 78% decrease. This contraction suggests weakening organic growth and potentially diminishing investor interest in utilizing the Ripple network for payments or decentralized applications.
Furthermore, derivative markets reflect reduced speculative appetite. In the past 24 hours, $10.14 million worth of XRP positions were liquidated, predominantly long positions, according to CoinGlass. Trading volume has also dwindled—from $19.5 million to $8.69 million within three days—highlighting a cooling of market enthusiasm.
Open interest in XRP futures dipped slightly by 1% to $5.41 billion, indicating a gradual unwinding of leveraged positions. This pullback likely stems from profit-taking following XRP’s recent price increase, suggesting traders are adopting a wait-and-see approach amid legal uncertainty.
Legal Clarity vs. Market Hesitation
Although the denied motion introduces short-term uncertainty, it does not reverse prior legal wins for Ripple. The landmark 2023 ruling—that secondary sales of XRP are not securities—remains intact and continues to provide critical regulatory clarity not only for Ripple but also for other digital assets navigating SEC scrutiny.
Ripple CEO Brad Garlinghouse and legal leadership remain confident in achieving a favorable long-term outcome. The current procedural delay is viewed as a temporary hurdle rather than a fundamental setback.
This distinction is vital for investor sentiment. While markets react to headlines, the underlying legal framework continues to evolve in Ripple’s favor—offering potential precedent value across the broader crypto industry.
What’s Next for XRP? Pathways to Recovery
Looking forward, XRP’s ability to reclaim bullish momentum hinges on two key factors: resolution of legal uncertainties and revival of on-chain activity.
To reach the widely anticipated $3.00 price target, XRP needs both technical confirmation—such as a sustained breakout above $2.65—and renewed network growth. Analysts will be watching RSI closely; should it fall below 50, it may signal weakening momentum and increased downside risk.
On the institutional front, Ripple’s existing partnerships—such as its collaboration with Bank of America—could reignite interest in enterprise adoption of the XRP Ledger. If these relationships lead to expanded use cases in cross-border payments or tokenized assets, they may drive renewed demand and restore investor confidence.
In the short term, XRP appears to be in a consolidation phase, balancing strong technical foundations against fundamental headwinds. Long-term holders remain optimistic, but broader market participation awaits clearer signals—from both courtrooms and blockchain analytics.
Frequently Asked Questions (FAQ)
Q: Is XRP still considered a security by the SEC?
A: No. A 2023 court ruling determined that secondary market sales of XRP are not securities, providing significant regulatory relief for Ripple and its users.
Q: Why did Judge Torres deny Ripple and SEC’s settlement motion?
A: The denial was based on procedural grounds—the court must independently assess whether any settlement is “fair and reasonable” before approval.
Q: What is the current price prediction for XRP?
A: Short-term forecasts suggest a target of $3.00 if technical strength holds, though fundamental challenges may delay this move.
Q: How has XRP network activity changed recently?
A: New address creation has dropped 78% since January, signaling weaker organic growth and declining user engagement.
Q: Could XRP drop below $2.00?
A: Yes, if support at $2.40 fails and selling pressure increases—especially amid prolonged legal delays or further decline in on-chain metrics.
Q: Are institutional investors still interested in XRP?
A: Yes, strategic partnerships and Ripple’s enterprise solutions continue to attract institutional attention, though broader adoption depends on regulatory clarity.
XRP stands at a crossroads where legal progress, market dynamics, and network health intersect. While recent setbacks have tempered momentum, the foundation for long-term growth remains intact. Investors should monitor both courtroom developments and on-chain activity closely as key indicators of future performance.