XRP price continued its strong downward trend, reaching its lowest level since October last year. The Ripple token fell to $1.3778, down by over 60% from its all-time high of $3.65. This article discusses what to expect as Ripple outlines a plan for additional XRP burn.
Ripple Labs Shares Plans for Boosting XRP Burn Rate
XRP supply could begin to decline in the coming months following Ripple’s implementation of a strategy to enhance its utility. In a statement, the company said that the XRP token will play an important role in upcoming initiatives, such as permissioned decentralized exchanges (DEX).
The company’s permissioned DEX will have three main pillars, including payments and forex, collateral and liquidity, and credit and financing.
XRP will be used across all these sectors, with every transaction, especially in pDEX burning the XRP token. Also, asset managers deploying tokenized money market funds or high-grade collateral in XRPL will use the XRP token, which will also lead to more token burns.
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A good example of all this is Evernorth, which plans to use the Lending Protocol to generate institutional-grade yield on its XRP holdings. The company aims to unlock a multi-billion-dollar yield for the XRP community.
XRP’s growth will likely accelerate ahead of the upcoming permissioned DEX, lending protocol, confidential transfers for MPTs, smart escrows, and Multi-purpose token (MPT) DEX integration, all of which will lead to more XRP activity and token burn.
The new developments are occurring as the XRP burn rate remains under pressure due to low transaction fees. Data compiled by XRP Scan shows that the network burned just 394 XRP tokens on Sunday. As shown in the chart below, the burn rate has remained within this range since August last year.
XRP Price Prediction: Technical Analysis
The weekly timeframe chart shows that the XRP price has been in a strong downward trend in the past few months as the crypto market crash accelerated.
It has recently moved below the important support level at $1.6107, its lowest level in April last year, and the neckline of the double-top pattern at $3.3712. A double top is one of the most common bearish reversal patterns in technical analysis.
The Average Directional Index (ADX) has continued rising, reaching a high of 33, its highest level since March last year. A rising ADX indicates that downtrend momentum is continuing.
XRP price has remained below the 50-week and 100-week Exponential Moving Averages (EMA), while the Relative Strength Index (RSI) and the Percentage Price Oscillator (PPO) have continued falling.
Therefore, the most likely Ripple price forecast is bearish, with the next key support level at the psychological $1, 30% below the current level.
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