XRP’s Deepening Fee Decline Signals Potential Market Correction — But Is a Major Rebound Forming?

Main Points :

• XRP transaction fees have dropped 89% since February, reaching their lowest level since 2020.
• Futures open interest has fallen 59%, signaling weakened speculative confidence.
• Social sentiment has plunged into the “fear zone”, historically a precursor to XRP rebounds.
• Technical patterns show a descending triangle that could send prices toward $1.73 or even $1.61.
• Long-term fundamentals remain strong as enterprise blockchain adoption continues expanding.
• Market data from external sources suggests capital rotation toward high-yield DeFi and AI-linked tokens.
• Investors are watching whether declining fees reflect weakening network activity — or simply normalizing after an overheated rally.

I. Introduction: XRP’s Sudden Fee Collapse and What It Means

XRP has returned to the spotlight after its network transaction fees experienced one of the most dramatic declines in years. According to Glassnode, daily fees on the XRP Ledger (XRPL) have dropped from 5,900 XRP to around 650 XRP, marking an 89% collapse. This level, not seen since December 2020, coincided with XRP’s price weakening toward the $2.00 range.

Such a drastic decline raises market-wide questions:
Is this a sign of shrinking network demand?
Or could it be a contrarian indicator — a moment of capitulation before a larger rally?

To answer these questions, we examine market structure, derivatives data, social sentiment, and technical patterns, supplemented by recent external research. We also provide visuals and price-converted USD ($) figures throughout to support investor decision-making.

II. Overview of XRP Fee Decline and Network Usage

Glassnode’s analysis shows a dramatic reduction in daily transaction fees since early February. Fees on XRPL are not based on percentage-of-value transfers — they exist primarily to prevent spam. Thus, when fees fall this sharply, it often signals:

• Reduced network congestion
• Lower demand for transactions
• Decline in speculative movement across XRPL
• Reduced automated trading activity

Below is a simplified visualization of the trend using the publicly stated data points:

(XRP Daily Transaction Fees — Illustrative Trend) The chart highlights a steep decline from ~5,900 XRP to ~650 XRP, reinforcing the scale of this shift.

Some analysts argue this decline reflects “transaction calmness” after an overly active first quarter. Others believe it indicates weakening economic activity on XRPL, which could pressure price action.

III. Derivatives Market: Declining Open Interest and Weakening Confidence

XRP’s futures open interest (OI) has fallen from 1.75 billion XRP to 740 million XRP — a 59% contraction. This signals reduced participation from leveraged traders and a declining appetite for speculative positions.

Funding rates have also fallen from 0.01% to 0.001%, which typically implies:

• Less bullish conviction
• Reduced long-side leverage
• A market waiting for clarity before re-entering positions

• (XRP Futures Open Interest — Illustrative Trend) If speculative momentum does not return, XRP may struggle to reclaim key psychological zones such as $2.20 or $2.50.

IV. Social Sentiment: XRP Enters “Fear Zone,” Historically a Reversal Signal

Analytics platforms such as LunarCrush report that XRP has entered its largest Fear, Uncertainty, and Doubt (FUD) zone since early October. However, historically, two notable events followed extreme fear in the XRP market:

1. A rebound in transaction volume
2. A technical reversal, often after a liquidity sweep

This creates a unique paradox:
Negative sentiment often becomes a leading bullish indicator.

Past market cycles show that XRP tends to rally from environments where sentiment is overly pessimistic — especially when technical structures align.

V. Technical Analysis: Descending Triangle Points Toward $1.73 Target

The current XRP/USD chart forms a descending triangle, a pattern known for bearish continuation. If the support around $2.00 breaks decisively, models indicate a potential drop toward:

• $1.73 (primary target)
• $1.61 (secondary support)

The triangle pattern’s measured movement corresponds to approximately a 15% decline from the current zone.

Technical Key Levels (USD):

If bulls fail to maintain the $2 zone, algorithmic trading systems may accelerate downward momentum.

VI. Broader Market Context: Capital Rotation Away From L1 Chains

External research across CoinGecko, Coinbase Institutional, and Binance Research reveals a structural shift:

1. Capital flows are rotating toward:

• AI-linked utility tokens
• High-yield DeFi protocols
• Real-world asset (RWA) platforms
• Modular blockchain ecosystems

2. Liquidity leaving XRP is not unique

Solana, Avalanche, and even BNB have seen temporary contractions in derivatives OI.

3. Institutional activity is slowing before year-end

Macro uncertainty — including U.S. regulatory overhang and ETF sector concentration — is causing portfolio managers to wait for clearer signals before re-entering altcoin positions.

This context helps explain XRP’s recent behavior: fees and open interest are declining not because XRP alone is weakening, but because market liquidity is shifting across ecosystems.

VII. The Bullish Counterargument: Falling Fees May Represent Network Normalization

Not all analysts view the fee decline as bearish.

Several argue:

1. XRPL fees dropping is not equivalent to revenue loss, unlike in Ethereum.
2. XRPL is designed to operate with extremely low fees — low activity increases efficiency.
3. Institutional adoption builds quietly, with fewer but larger-value transactions.

Ripple’s recent moves in cross-border settlement, CBDC trials (Palau, Bhutan), and enterprise banking partnerships point toward strategic, long-term expansion. These activities do not necessarily increase raw on-chain fees but do increase XRP’s underlying utility.

Thus, a low-fee environment might simply mean XRPL is functioning normally while awaiting the next cycle of utility expansion.

VIII. Forward-Looking Scenarios for 2025

Scenario A — Bearish Continuation (Probability: Medium)

• Price breaks below $2
• Descending triangle confirms
• Drop to $1.73, possibly $1.61
• Market waits for renewed institutional catalysts

Scenario B — Sideways Accumulation (Probability: Medium-High)

• Price fluctuates between $1.98 and $2.30
• Fees remain low
• OI gradually rebuilds
• Sentiment slowly improves

Scenario C — Bullish Divergence (Probability: Low-Medium)

• Sentiment recovers from extreme fear
• On-chain activity rebounds
• XRP retests $2.50
• Funding rates normalize with increased long positioning

Investors seeking new revenue opportunities should watch for divergence signals such as rising fees, increased OI, or wallet activity spikes.

IX. Investment View for Readers Seeking New Crypto Opportunities

For investors exploring new altcoins or blockchain applications, XRP’s current positioning offers:

Short-term caution

The technical structure suggests a possible retest of lower ranges.

Mid-term accumulation potential

Declining sentiment has historically preceded:

• Whales increasing positions
• Speculators returning during volatility spikes
• Network utility expansion announcements

Long-term utility thesis

XRP remains one of the few assets with:

• Established enterprise use cases
• Real payment settlement functionality
• Active global regulatory engagement

Compared to highly speculative meme coins or AI narratives, XRP’s value proposition aligns more closely with institutional-grade blockchain finance.

X. Conclusion

The dramatic drop in XRP fees, open interest, and sentiment points toward a market undergoing structural recalibration. While the descending triangle signals a possible move toward $1.73, broader historical patterns show that extreme pessimism often sets the stage for a significant recovery.

Whether XRP follows its bearish path or surprises the market with a bullish reversal will depend on how quickly network activity, derivatives participation, and sentiment rebuild in the coming months.

For investors searching for new revenue opportunities, XRP offers both caution and strategic potential. The key is monitoring market structure signals and recognizing that the current environment may represent not a collapse — but a reset before the next macro move.