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The XRP Ledger (XRPL) witnessed a massive spike in the XRP burn rate amid a price surge that saw XRP breach the much-coveted $0.65 price territory.
The broader crypto market saw a resurgence of bullish momentum, and XRP was not left out in the rally. XRP began March below the pivotal $0.60 level, changing hands at $0.5868. Nonetheless, the token quickly broke through major resistance levels to close on March 1 at $0.6013.
This slow but gradual price uptick spilled into March 2, resulting in a surge to a high of $0.6501, as XRP recorded one of its most bullish days of the year. Interestingly, amid the rally, the XRP burn rate saw a massive spike, towering over the average of 3,000 tokens a day.
Over 6K XRP Burned
According to data from leading XRPL explorer XRPScan, the burn rate increased to 6,721 XRP on March 2, marking the highest intraday burn in over a month. The last time XRP recorded a similar spike in burn rate was on Jan. 16, 2024, when the network incinerated 7,609 XRP.
Notably, the network recorded multiple spikes in burns from Dec. 30, 2023, to Jan. 7, 2024, owing to the launch of XAH, the native token of the XRPL sidechain Xahau network. Market participants continuously burned XRP tokens to mint XAH during this time. Following the recent burn, the total burned tokens have increased to 16.178 million.
The latest increase in burn rate can be attributed to a rise in network activity as investors flock to the XRPL to execute transactions. Active addresses on the network have also seen an upsurge throughout this year, sitting at 18,363 on March 2, much higher than the 7,700 average of last year.
It bears mentioning that network activity differs considerably from trade volume, as the latter measures the amount of XRP tokens traded in the market. This metric also saw an increase on March 2, hitting a high of $2.96 billion over a 24-hour, per CoinMarketCap data.
Inflation Discussions and Impact on Price
The discussion around XRP inflation and its effects on price movements has dominated the XRP community. However, some community figures like to believe that the deflationary trend triggered by its burn mechanism could also impact price movements.
According to on-chain data, the XRP Ledger is designed to automatically burn fees, which currently sit at $0.0001 per transaction. This mechanism helps to mitigate the risks of spam transactions. While its original intent is not to bolster XRP’s price, some proponents have argued that it could help in this manner.
Ripple CTO David Schwartz has debunked arguments for this theory, citing the previous monumental Stellar (XLM) burn. Meanwhile, XRP has breached the $0.65 level as of press time, currently changing hands at $0.6605 amid an impressive 5.87% gain in 24 hours.