XRP has become the focal point of the cryptocurrency market, with its dynamic trading volume contrasting sharply with its declining on-chain activity.
The surge in spot trading reflects an increase in interest from institutional and retail investors, signaling a shift in market dynamics for 2025.
According to Ripple's Q1 2025 report, 'Despite volatility, XRP continues to maintain a unique position driven by regulatory clarity and institutional support.'
Regulatory progress drives XRP spot trading volume to historic highs.
In recent months, XRP's spot trading volume has seen unprecedented growth, averaging $3.2 billion per day in Q1 2025. This surge reflects strong demand from institutional and retail investors.
At the end of January and early February, Bitcoin trading volume surpassed $16 billion, highlighting a resurgence in trading activity after a period of regulatory uncertainty. Currently, major exchanges dominate trading, with Binance leading, accounting for about 40% of total trading volume.
The increase in trading volume is accompanied by a significant rise in the share of dollar and stablecoin transactions, climbing from 25% in Q4 2024 to 29% in Q1. This shift marks a growing interest in fiat trading environments. Additionally, the price of XRP surged dramatically, peaking at $3.40, showcasing its resilience compared to competitors like Bitcoin and Ethereum.
Investment products linked to XRP have also seen impressive inflows, reaching $214 million year-to-date, nearly on par with Ethereum, indicating investor confidence in the asset's future.
Notably, some analysts express caution. Cryptocurrency expert Steph pointed out, 'XRP's daily trading volume has plummeted by over 86% in the past six months.' He noted potential vulnerabilities in the current market structure.
Despite a recent decline in daily trading volume, key regulatory measures such as the SEC's withdrawal of appeals have created a safer environment for XRP. Major institutions like Franklin Templeton and the Chicago Mercantile Exchange (CME) have launched XRP-based ETFs, further validating institutional investor interest.
The decline in on-chain activity signals potential concerns.
Despite the surge in trading volume, the on-chain activity of the XRP Ledger (XRPL) presents a starkly different picture. The Q1 2025 report clearly states that XRPL's transaction volume dropped by 37.06%, from 167.7 million transactions in Q4 2024 to 105.5 million transactions.
Additionally, the number of new wallet creations has significantly decreased by 40.28%, while the amount destroyed as transaction fees has also dropped by 30.89%. Activity within the decentralized exchange (DEX) ecosystem has also declined, with total trading volume dropping from $1 billion to $832 million, a decrease of 16.94%.
Data from DefiLlama shows that the total locked value (TVL) of XRPL has stagnated around $80 million, a trivial amount for an asset of XRP's caliber, while monthly DEX trading volume hovers around a staggering $3.3 million.
The Q1 report does bring a glimmer of hope, suggesting that Ripple's strategic acquisition of Hidden Road (valued at $1.25 billion) may pave the way for increased on-chain utility and institutional applications.
As assessed in the report, 'Ripple's acquisitions reflect a significant shift in institutional participation within the XRPL ecosystem,' hinting at potential pathways to revitalize on-chain activity.
Ripple's Q1 2025 report summarizes a dual-split reality: while XRP's trading volume shows a strong recovery in a favorable regulatory environment, the sharp decline in on-chain metrics raises urgent questions about the platform's continued utility. Looking ahead, monitoring trading activity and on-chain dynamics is crucial for understanding XRP's market trends.
