XRP sees sharp swings following surge in DEX trading volume

XRP was among the lagging assets, which skipped the recent brief altcoin market. The recent dip for XRP to below $2.50 coincided with peak DEX activity. 

XRP showed relative weakness under $2.50, as the asset failed to rally along with other altcoins. Instead, XRP showed weakness under $3, as more coins were sent to exchanges. As Cryptopolitan reported, XRP whales dumped up to $50M worth of tokens on the open market each day, further pressuring the price. 

In addition to exchange inflows, XRP also showed a significant pickup in DEXs activity. XRP is a recent addition to decentralized trading, mainly due to its technology, until an EVM-compatible version was created for XRPL. 

XRP slowed its relentless climb after the recent delays of ETF approval dates. While XRP is seen as one of the most probable additions to crypto ETF, the US Government shutdown has moved the dates indefinitely into the future. 

XRP Ledger posts more active DEX activity in October

In the past few weeks, DEX activity linked to XRPL increased, with a higher daily baseline. 

Volumes peaked in the past week, following the market-wide liquidation on October 10-11. During the period of peak DEX activity, XRP sank further under $3, pressured by the overall market correction. 

DEX transactions also increased on XRPL, rising from a recent low of 600K to over 900K transfers daily. However, transfers are still lower compared to the last quarter of 2024. 

The DEX activity is seen as an indicator of more active trading. The volumes may point to different scenarios. In the bearish case, whales are using DEXs to shed more XRP, as they expect the downtrend to continue. 

Since all orders were filled, the opposite scenario may be an accumulation of XRP by smart money, expecting a recovery to a higher range. One possible explanation for XRP is that retail is panic-selling, while whales are using the opportunity to re-buy at a lower range. As of October 20, sentiment is shifting for XRP, with crowd money showing a more optimistic attitude, as whales remain bearish. 

XRP grows its DEX liquidity

Recent data shows the past two quarters achieved gradual growth for XRPL decentralized liquidity. 

Since October 2024, decentralized trades for XRP moved to a higher liquidity range, often with over $20B available daily. 

On October 10, XRPL DEX liquidity briefly shot up to a local peak above $40B, coinciding with one of the days of active selling. XRP is still concerned with available liquidity, as old holders may seek to cash out. If liquidity fails, the realized price may remain much lower. 

In addition to DEX activity, XRP may be pressured by derivative markets. The coin’s open interest inched up to $1.27B, with a slight recovery for long positions. Traders are cautious about shorting XRP, but long positions go as low as $2.30, potentially leading to liquidations. For now, XRP has avoided derivative position liquidations, as traders focused on BTC. 

Sharpen your strategy with mentorship daily ideas - 30 days free access to our trading program