From over 700 million XRP earlier this week to about 412 million on May 22, XRP has experienced a sharp decline in payment volume, losing almost 300 million tokens in a single day. Particularly since the asset is still navigating important technical zones on its price chart, this sharp decline raises questions.

A major change in sentiment has occurred as XRP technically broke out of a downward channel that had been in place for months. Following its ascent above the 50-day and 100-day exponential moving averages (EMAs), XRP is currently consolidating beneath the $2.50 threshold. The 200 EMA, which frequently predicts mid- to long-term trend reversals, was among the several moving averages that it regained during the most recent bullish push.

The payment volume, a crucial indicator of real transactional usage, has precipitously decreased even though the price has been making an effort to recover. This decline might indicate a short-term lull in institutional flows or declining user activity, both of which are critical for a utility-focused token like XRP. Earlier in May, payment volume peaked, with multiple spikes above 700 million XRP coinciding with price breakouts.

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Source: XRPScan

These two metrics decoupling now raises the possibility that the rally is waning unless usage increases. In the future, the $2.30-$2.35 range, which corresponds to the 100 EMA and a previous breakout zone, is supporting XRP. A return to $2.60 and above is still possible, as long as it stays above this band. The price may decline toward the $2.15-$2.20 region if this support breaks.

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The altcoins and the rest of the cryptocurrency market should consider XRP a bellwether for payment-driven tokens. Its volume dynamics frequently mirror general opinions regarding the relative importance of cryptocurrency's use cases versus speculative trading. As long as network usage improves, there is the potential for another leg up as the RSI remains below the overbought zone and shows no significant bearish divergence.

Bottom line: XRP must have steady on-chain activity to support its breakout. If not, there is a chance that this technical rally will become just another brief rebound.

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