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XRP has marked an impressive rally to two-year highs in recent days and an impending airdrop could drive the gains.
Traded around $ 0.70 at the time of writing, the third largest cryptocurrency in the world by market value has risen 130% from near lows of $ 0.30 seen on Saturday. Prices hit a high of $ 0.79 early Tuesday, the highest level since May 10, 2018, according to CoinDesk 20.
On-chain activity picked up the pace along with rising prices, with new account activations on XRP Ledger surging more than 200% to a record high of 5,562 over the past five days, according to the source. XRPScan data.
Analysts are associating the XRP price increase and other metrics with the Flare Network smart contract platform’s ‘spark’ token airdrop for XRP holders.
The free distribution of 45 billion spark tokens, scheduled for December 12, is supported by Ripple’s investment arm RippleX (formerly Xpring).
“The upcoming airdrop is overloading the XRP bull market and driving the mind-sharing of one of the largest crypto communities crazy,” according to Jehan Chu, managing partner of Hong Kong-based blockchain investment firm Kenetic Capital. “With the upcoming launch of Flare, a smart contract utility fork of XRP, the pair will attempt to challenge Ethereum’s dominance in decentralized finance and decentralized applications.”
Flare integrates with the Ethereum virtual machine allowing existing decentralized Ethereum applications (dapps) to be ported to Flare to serve the XRP ecosystem.
XRP’s foreign exchange inflows have soared along with the rise in prices, suggesting greater selling pressure in the market.
Nearly 2.3 billion XRPs, worth nearly $ 1 billion, have been moved into cryptocurrency exchanges since Saturday. This is more than three times the average daily influx seen in 2019, according to blockchain intelligence firm Chainalysis.
Investors typically transfer the coins in exchange when they want to liquidate their holdings, increasing supply in the market and taking direct custody of the coins when prices are expected to rise.
According to Chainalysis economist Philip Gradwell, the increased influx doesn’t necessarily mean an imminent sell-off.
“Demand has been strong so far, with an average intensity of trade double the average” Gradwell tweeted. Average trade intensity, which measures the number of times an incoming coin is traded, stood at 14 on Monday, significantly higher than the 365-day average of 5.8.
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