In the wake of the U.S. Securities and Exchange Commission’s (SEC) decision to drop its four-year-long lawsuit against Ripple, XRP experienced a brief surge in trading activity. However, this post-lawsuit excitement has already started to fade, with signs pointing toward a bearish outlook for the popular cryptocurrency.

On March 19, the SEC officially ended its litigation against Ripple, a move that sent waves of optimism throughout the crypto community. The news caused a sharp uptick in XRP’s network activity, with the number of active addresses trading the token reaching a year-to-date (YTD) high. This spike reflected a surge in investor interest, as market participants believed that the resolution of the lawsuit would pave the way for XRP’s recovery and growth.

However, just days after the initial euphoria, the momentum surrounding XRP has started to wane. On-chain data from Glassnode reveals a significant drop in the number of active XRP addresses. After hitting a peak of 626,854 active addresses on March 19, this number fell sharply to 54,704 by March 23, representing a 30-day low. This decline suggests that the initial wave of excitement has subsided, and the token is now struggling to maintain its position in the market.

What the Decline in Active Wallets Means for XRP

The drop in active wallet counts is a key indicator of reduced investor interest. Typically, a decline in active addresses signals a slowdown in transaction activity, which can be a precursor to a further decrease in liquidity. For XRP, this suggests that demand for the token is fading, and buying pressure is weakening. This is a classic bearish signal in the world of cryptocurrency, as reduced market participation often leads to falling prices.

As the hype surrounding Ripple’s legal victory fades, XRP’s liquidity is showing signs of strain. The diminishing number of active wallets is a cause for concern, as it implies that fewer traders are engaging with the token. Additionally, as XRP continues to lose momentum, it may face difficulty in maintaining its current price levels.

XRP Price Analysis: Can the Token Hold Above Key Support Levels?

At the time of writing, XRP is trading at $2.46, just above its long-term support level at $2.13. The price action suggests that the cryptocurrency is still holding on, but its ability to maintain this support is uncertain. If the market continues to show bearish tendencies, XRP could test this crucial support zone in the near future. A failure to hold above $2.13 could result in a further price drop, potentially bringing XRP down to the next significant support level around $2.00.

On the other hand, if XRP manages to break through the resistance level at $2.61, there could be a chance for a recovery. A successful breach of this resistance would pave the way for a potential rally towards the Super Trend Indicator, which currently sits at $2.84. This level has been acting as a dynamic resistance point, and overcoming it could signal the start of a new uptrend for the token.

The Super Trend Indicator: A Key Tool for XRP Traders

XRP’s price is currently sitting below its Super Trend Indicator, which is often seen as a signal of bearish market conditions. This indicator tracks the overall direction and strength of a price trend, changing color to indicate whether the market is in an uptrend or downtrend. Green indicates an uptrend, while red signals a downtrend.

For XRP, the fact that it is trading below the Super Trend line suggests that the market sentiment is currently leaning bearish. Traders often interpret this as a signal to sell or reduce their long positions. In fact, the continued pressure below the Super Trend line raises concerns that XRP could face more downward movement in the coming days.

Will XRP Recover or Slide Further?

XRP’s future direction remains uncertain, as the token grapples with fluctuating market sentiment. While the end of the SEC lawsuit initially boosted investor confidence, the recent decline in active addresses and the ongoing bearish pressure indicate that the token’s rally may have already peaked.

For XRP to regain momentum, it will need to see a substantial increase in buying activity, which could help it break through key resistance levels like $2.61 and ultimately push the price towards $2.84. However, if the current bearish trend continues, XRP may struggle to hold its ground, and a drop to lower support levels could be on the horizon.