The Crypto Basic

The XRP market is showing a strong divergence between price action and network growth.

New on-chain data points to continued expansion of the XRP Ledger despite a prolonged price cooldown. According to data highlighted by community figure Eri, XRP Ledger wallets have climbed to 8.19 million as of April 5, 2026.

Interestingly, this steady rise comes even as XRP’s price has struggled to recover since it dropped from its July 2025 peak of $3.65. Currently trading at $1.33, the asset remains down 63.56% from that high, although it has posted a modest 2.92% gain over the past 24 hours.

The divergence suggests that while price momentum has softened, user adoption and participation on the network continue to expand.

Key Points

XRP Network Growth Outpaces Price Decline

On March 17, the analytics firm reported that the XRP Ledger surpassed 7.7 million non-empty wallets for the first time in its 13+ year history.

This milestone coincided with a surge in activity, as active addresses reached a five-week high of 46,767. During that period, XRP’s price also saw a short-term breakout, climbing 14% within 48 hours to briefly breach the $1.60 level.

It is worth noting that estimates of total XRP wallet counts vary by data provider. While Santiment reports around 7.7 million non-empty wallets, CryptoQuant places the figure closer to 8.1 million.

This discrepancy likely stems from differences in methodology, such as counting only active wallets versus all accounts ever created.

Wallet Distribution Shows Retail Dominance

Further insights into wallet distribution reveal that the majority of XRP holders remain in the lower balance tiers. Data shared on March 21 shows that:

• 5.66 million wallets hold less than 100 XRP
• 2.01 million wallets hold between 100 and 100,000 XRP
• Just 32,054 wallets hold more than 100,000 XRP

This distribution highlights a strong base of retail participants, even as a relatively small number of large holders continue to control significant portions of supply.

The continued rise in wallet count, despite a notable price drawdown, may indicate underlying confidence in XRP’s long-term utility. Growth in addresses reflects onboarding of new users, increased experimentation, and ecosystem activity on the XRP Ledger.

While short-term price performance remains subdued, the steady expansion in wallets and active addresses suggests that network fundamentals may be strengthening beneath the surface.

Community Reaction

Commenting on the data showing growth in the XRP holder base, X user @mortoom remarked that no crypto asset trades on its fundamentals, and he does not think that will change in the coming years.

Mortoom argued that XRP appears to have one of the largest and fastest-growing communities, yet it still trades like any other “shitcoin.”

He then asked Eri which entity actually controls the price, since increased user adoption has not led to a price increase. In response, Eri stated that market conviction ultimately drives the price.

Market conviction controls the price.

— 🌸Eri ~ Carpe Diem (@sentosumosaba) April 5, 2026

XRP Open Interest has soared to a 2-week peak amid an increase in overhead liquidity, leading to suggestions of a potential short squeeze.

The recent market-wide slump, which pushed XRP below the long-standing $1.3 support, has led to an increase in the XRP Open Interest (OI), as short positions dominate. Data suggests this situation often leads to an imminent short squeeze.

Key Points

• The XRP Open Interest rose from $892 million to $951 million, hitting a two-week high as the price fell below $1.3.
• Funding rates stayed negative, reaching -0.0010, indicating that short traders dominated.
• Liquidation clusters above the current price totaled $3.055 billion, with a major cluster of $318.57 million at $1.356.
• This situation often leads to a short squeeze if prices rise above levels dominated by short liquidation clusters.

XRP Open Interest Rises While Price Falls

CryptoQuant analyst Maartunn called attention to this situation. He noticed a rise in short positions, along with increasing Open Interest and negative funding rates. Based on these signals, he suggested that the market could be setting up for a short squeeze.

Notably, data from Coinalyze confirms this trend. After XRP dropped below the $1.31 support level early on April 5, the price continued falling and reached $1.26 by 12 noon, marking a 3% decline from that support level.

During the same period, XRP’s Open Interest moved higher instead of falling alongside the price. Specifically, it spiked from $892 million to $951 million, representing the highest level in over two weeks. This shows that traders were opening new positions as the price dropped.

At the same time, the funding rate kept falling and stayed negative over a 24-hour period, reaching -0.0010 when Maartunn shared his analysis. A negative funding rate means short traders were in control, paying long traders to keep their positions open. These signals show that many traders were actively placing short bets during the price drop.

Bearish Sentiment Easing

The continued negative funding rate confirmed that the market had turned strongly bearish. Notably, traders were not only closing long positions but were adding more short positions, which increased the pressure on the price.

However, things began to change slightly as the price started to recover. After XRP’s price bounced from $1.26, the rise in Open Interest slowed down. It dropped slightly to $943 million, while the price moved around $1.29 at the time Maartunn shared his findings.

As the recovery continued, XRP moved up to $1.34, while Open Interest fell again to $942.9 million. This suggests that some of the positions opened earlier, likely short positions, were being closed or forced out, as bearish pressure started to weaken, even though the overall mood in the market has not fully turned positive.

Over $3 Billion in Liquidity Sits Above Price

Elsewhere, the liquidation heatmap provided by Coinglass for the Binance XRP/USDT pair shows a large number of liquidation levels sitting above the current price. 

Between $1.351 and $1.386, the market currently witnesses about $3.055 billion in leveraged positions. Within this range, one major cluster of $318.57 million sits at $1.356, just 1.19% above the current price of $1.34.

These levels often act like magnets for price movement. Markets tend to move toward areas where large liquidations can happen. If XRP moves into this range, forced buying from liquidated short positions could push the price up quickly, creating a short squeeze.

Where Next for XRP?

Even though sentiment still looks bearish, the current situation suggests a possible move higher in the short term. This kind of setup often leads to upward moves as a result of market positioning. 

If XRP continues to rise and enters the $1.35 to $1.38 range, it could trigger more liquidations and push the price higher. However, if the price fails to reach that range and drops again while funding rates stay negative, it would suggest that sellers still control the market and that the recent bounce may only be temporary.

A recent legal document from the U.S. Congress has now reaffirmed the classification of XRP as a commodity by the SEC and CFTC.

The document released by the U.S. Congressional Research Service (CRS) called attention to the latest framework developed by the U.S. SEC, which classified XRP alongside Bitcoin and Ethereum as digital commodities.

Key Points

• The U.S. CFTC and SEC classified XRP as a digital commodity in a joint statement in March 2026.
• A Congressional Research Service report has now reaffirmed this by placing XRP in the digital commodities category under the SEC’s new framework.
• The SEC’s updated system divides crypto assets into five groups.
• The SEC v. Ripple Labs introduced a major difference between initial token sales and secondary market trading.

Congress Document Reaffirms XRP Classification 

Notably, the recent moves show U.S. regulators have taken a more direct position on XRP. For context, in March 2026, the U.S. CFTC and SEC released joint guidance that placed XRP alongside Bitcoin and Ethereum as a digital commodity.

This move showed a change from earlier views under the previous SEC leadership, which often treated most crypto assets as securities.

The update has now gained more support through a new Congressional Research Service (CRS) legal document, which highlights the same classification, giving it more credibility. XRP’s inclusion in this category indicates that both regulators and lawmakers now show stronger alignment on how to treat major crypto assets.

Content of the Congressional Document

The CRS document, published on April 3, 2026, explains how U.S. securities laws apply to crypto assets. For context, the SEC has adopted a five-part system that groups assets into digital commodities, digital tools, digital securities, stablecoins, and collectibles. Within this system, the report places XRP under digital commodities.

The document notes that digital commodities get their value from how their networks function and from market demand, not from the efforts of a central group. As a result, the SEC does not treat them as securities by default. Instead, regulators assess how people sell or promote these assets to decide if a transaction qualifies as an investment contract.

The report also explains that a crypto asset can fall under securities rules if issuers promote it with promises of profit based on their work. Once those promises no longer drive expectations, the asset can move out of that category. The new approach focuses on real use and investor expectations instead of relying only on decentralization.

Ripple Case Influencing Legal 

The CRS report also discussed the case involving Ripple, highlighting its impact on crypto regulation. It mentioned the ruling in SEC v. Ripple as a major example of how courts apply securities laws to digital assets.

Notably, the case introduced a difference between early token sales and later trading. Courts may treat initial sales as securities offerings in some situations, while secondary market trading does not always meet that standard. 

However, the document clarified that courts still disagree on some details. Notably, different judges have taken different positions, which shows that the legal framework continues to develop. Despite this, the Ripple case remains an important reference point in current discussions.

The CRS document placed these developments within a broader policy shift in the United States. The SEC has started to focus more on clarity and less on aggressive enforcement. As a result, it has dropped some cases and launched efforts to guide the crypto market more clearly. Meanwhile, Congress continues to work on laws that will define how the SEC and CFTC share oversight.