Last month, the price of XRP rose 91% as the digital asset finally found a spark and is now catching up with Bitcoin (BTC) and Ether (ETH). The likely catalysts for the XRP rally are the surge in unique addresses, buybacks from Ripple, and the possibility of a new product release.
Unique XRP addresses are increasing
On-chain data can be useful to represent the general sentiment regarding a cryptocurrency as it accurately reflects the activity taking place on the blockchain.
In the case of XRP, the addresses that interact with XRP rose in late November. The trend picked up when the cryptocurrency rose 27% on a day on November 22nd.
Analysts at Santiment, an on-chain analytics firm, said the increase in active addresses in one day was the largest since May 1. They write:
“Ripple’s price jumped + 27% today, and the number of unique addresses handled in a single day (24,408) on the XRP network was the highest since May 1st.”
Active addresses can go up in price at the same time for several reasons. First, the number of addresses accumulating XRP could increase the value spikes. Second, there may be an overall surge in user activity on the blockchain.
Ripple buybacks could drive XRP price up
In the third quarter of 2020, Ripple bought XRP for $ 45.5 million as part of a buyback program. The company described the initiative as a step in supporting healthy markets.
The sales summary presented in the third quarter 2020 report shows total purchases of $ 45.5 million. Ripple has not bought back XRP in the previous quarters. The report reads:
“As stated in the Q2 2020 XRP market report, Ripple is buying XRP and may continue to buy it to support healthy markets.”
A buyback can cause the buyer’s demand for an asset to increase, regardless of whether it is stocks, commodities, or cryptocurrencies.
While $ 45.5 million may not be large enough to significantly affect the value of XRP in the cryptocurrency exchange market, it could have improved market sentiment around the asset.
Ripple can open a new service
In early November, Ripple Labs filed a trademark application with the US Patent and Trademark Office (USPTO) for a product called Paystring.
The trademark application describes Paystring as a product within the category of electronic financial services for receiving and sending money transfers. It says:
“The PAYSTRING brand registration is intended to cover the categories of electronic financial services, namely monetary services for receiving and paying out transfers and monetary gifts in fiat currencies and virtual currencies over a computer network and for exchanging fiat currencies and virtual currencies over a computer network. ”
The clash of excitement over a new product release, XRP buybacks, and the rising address in on-chain data could be the main reasons for XRP’s recent rally to a 16-month high.
As a result, XRP was able to break out of two multi-year areas on the high-time frame charts. In particular, the weekly chart shows a clear breakout to a price level that it has not seen since November 2018.