Why is XRP Down Today? Key Factors Behind the Price Drop

Contrary to the expectations that XRP will see a price appreciation after yesterday’s Bitwise spot XRP ETF launch, XRP is trading below $2 at $1.85. XRP’s price is down today primarily due to heavy selling pressure caused by large wallet transfers that triggered significant token sell-offs on exchanges. Even then, the institutional interest in XRP remained strong due to the ETF launch. The imbalance thus caused between supply and demand is the major reason for XRP’s low performance today.

As per statistics, 41% of the XRP tokens are currently trading at a loss. This is the reason for short-term volatility and price fluctuations. XRP has broken below critical support levels around $2.15–$2.22, and a bearish trend has come in for the token. The 50-day moving average has crossed below the 200-day moving average, creating a death cross pattern. With the bearish trend, the selling pressure has gone up. 

Other Macroeconomic Features that Contributed to XRP’s Low Price

The global cryptocurrency market is in a weak phase due to several geopolitical issues, including a 100% tariff announcement on Chinese imports by the US Government. This has led to a substantial amount of forced liquidation of various crypto assets. The fragile market conditions caused by a series of liquidations last month and the consequent fear of the market among the investors persist.

News about a less likely Fed rate cut has also influenced the larger market sentiments. This has reduced investors’ optimism and led to reduced institutional adoption of certain cryptocurrencies. Other areas of concern include potential recessions in areas such as housing, and cautious traders ahead of important U.S. jobs data have intensified the selling pressure. The market sentiment is predominantly that of “Fear”. So more investors are moving to other stable assets and moving away from volatile assets such as Bitcoin or XRP. These macroeconomic and market dynamics have contributed significantly to the downward pressure on XRP prices today.

Have XRP Perpetual and Spot Flows Diverged in the Last 48 Hours?

XRP spot and perpetual flows have diverged significantly in the last 48 hours. The spot flows have increased by 2,490% in an eight-hour period, showing strong inflows and heightened trading activity. However, the outflows have nullified the inflow effect, with the net inflow being just $14 million. The net effect of the spot flows was negative because of high selling pressure. 

In the perpetual futures market, XRP saw large liquidations and substantial selling pressure, with whales selling over 200 million XRP tokens soon after the launch of the Canary XRP ETF. This resulted in spot ETFs not transforming to price gains due to factors like T+1 settlement delays and significant over-the-counter (OTC) accumulation off-exchange.

The Bottom Line

Despite institutional demand spearheaded by the recent spot ETF launches, XRP is down today due to several macroeconomic factors that have made the market generally weak. The spot market showed strong activity and inflows, while perpetual futures and whale selling triggered selling pressure, causing this divergence in flows. All these together caused the downfall of the XRP price below $2.