Prominent crypto research firm Kaiko reports that the XRP token made impressive progress in trading volume in August 2023. This development comes amid symbolic poor price performance in the said month.
XRP dominates the Altcoin market in trading volume amid price declines
According to the latest data debrief by Kaiko on Sept. 4, the market research firm notes that XRP recorded an average daily trading volume of $462.8 million in August, representing the highest value of that metric in the altcoin market.
Solana (SOL) followed in second place, with trading volume of $128.4 million. Other altcoins that also saw significant average daily trading volume in August included Binance Coin (BNB), Dogecoin (DOGE), and Litecoin (LTC).
Source: Kaiko
As mentioned earlier, the increase in XRP trading volume has been accompanied by a disappointing market performance. Kaiko notes that the altcoin experienced a 25% price drop in August.
This negative price trend was in stark contrast to July, in which XRP had posted large gains following Ripple’s partial victory over the US Securities and Exchange Commission (SEC).
Why Is XRP Price Struggling?
To explain the contrast between XRP’s negative price performance and rising trading volume, Kaiko provided some interesting, in-depth analysis.
According to the research firm, the July court ruling led to a high demand for XRP by US traders, as seen in the token’s price movement. Kaiko noted that the average XRP trade size on Coinbase, the largest US crypto exchange, saw a significant boost, surpassing all of the top ten altcoins.
However, this huge demand for XRP was only present in the US. Kaiko states that there was significant selling pressure on foreign exchanges, indicating that most investors sold their tokens to capitalize on XRP’s profits from the court victory.
In particular, Kaiko reported that South Korean exchanges Upbit and OKX recorded the strongest XRP selling pressure in August.
Kaiko notes that the trading volume of XRP in foreign markets is higher than on US exchanges. The research firm reported:
Overall, the share of XRP traded in US markets remains lower than on offshore exchanges. XRP is only the sixth most traded altcoin in the US by cumulative trading volume, while topping the list in offshore markets.
Therefore, the high demand for XRP in the US was overwhelmed by the higher selling pressure in the global market, which explains why the XRP market price took a nosedive in August.
At the time of writing, XRP is trading at USD 0.503, having gained 0.17% over the past day based on data from CoinMarketCap. However, the fifth-largest cryptocurrency is still in the red zone, dropping 2.28% and 19.70% on the weekly and monthly charts.
XRP trading at $0.5019 on the daily chart | Source: XRPUSD chart on Tradingview.com
Featured image of CoinMarketCap, chart from Tradingview.