Why XRP Down Today? Key Reasons Behind the Sudden Price Drop

The Ripple-backed token is in red today. The token is trading at around $2.1, and the price is down by 0.79 % in the past 24 hours.

The weekly loss reached over 9%. The market cap touched $121.85 billion. The 24-hour trading volume has surged past 32% reaching $75.76 billion. The price is going down while the trading volume is soaring, which clearly indicates the persistent selling pressure around the token. Moreover, the XRP is trading below the 200-day Simple Moving Average (SMA) of 2.6153.

The major reasons for the XRP price plunge include the whale offloading, the developments from Japan, continued selling pressure due to the crypto market-wide sell-off, ETF profit-taking, and the lingering effects of Yearn Finance security breach, coupled with macro uncertainties surrounding upcoming Fed rate cuts. 

Whale Offloading and ETF Profit-Taking Drag the Price Down

The XRP whales have been offloading the token in the past week. In the past 24 hours alone, the token reportedly witnessed around $6.9 million in liquidations, with long positions dominating. The open interest rate is negative, further reflecting the investor caution.

November saw a flurry of XRP spot ETFs getting SEC (U.S. Securities and Exchange Commission) approvals and going live on the market. The anticipation around these launches has led many investors to buy XRP, raising the prices prior to launches. But once these spot ETFs went live, these traders sold the XRP following the classic “buy the rumor, sell the news” move. In the past 24 hours, the ETFs cumulatively attracted $89.65 million. But the private OTC channels lack liquidity, forcing the spot ETF managers to buy from the public exchanges, which is supposed to push the price up. Yet, unlike the bearish impact from ETF profit taking, the buying from public exchanges may not have a considerable impact, as ETFs currently form only around 0.60% of the total XRP Market Cap.

The Mounting Macro Uncertainties Around the Globe

The Bank of Japan (BOJ) is recalibrating its monetary policy, and the Governor Kazuo Ueda had already hinted about a Fed rate hike in December. The hawkish policy shift had led the yield rate of the bonds to soar to a 17-year high and a market-wide sell-off in crypto. The higher interest rate had forced the investors to take a risk-averse position. The strengthening Yen and reduced risk appetite amid the uncertainties are pushing the prices down. On top of it, the uncertainties around Fed rate cuts continue to weigh down on the crypto market. To add fuel to the fire, the DeFi Finance platform, the Yearn Finance was hit by an attack resulting in a loss of around US$9 million on November 30. The attack led to panic in the crypto market, leading to market-wide sell-off yesterday, December 1. The anxiety caused by the attack is still lingering in the market. 

The Technical Breakdown of the XRP Further Pushes the Selling Pressure Up

The XRP failed to hold $2.15-$2.20 support zone, and the technical breakdown has led to deeper corrections. Further, the algorithmic trading and leveraged traders are making the drop worse. The failure to hold the current level would likely lead to deeper corrections to $1.7123 to $1.89 zone. The 14-day RSI reading of 38.1925 suggests a neutral position inclining towards the bearish territory. Moreover, the volatility remains high with a value of 6.41 %. The Fear & Greed Index value of 24 (Extreme Fear) suggests that the investors continue to remain cautious. 

What’s Ahead for the XRP? A Rebound on the Horizon?

The price plunge of the XRP resulted from a combination of factors ranging from technical breakdown to macro uncertainties. Nevertheless, Ripple, as a financial technology firm, is expanding across the globe, focusing on the usage of XRP and RLUSD especially for cross-border transactions. Hence, the long-term potential of XRP remains solid. The current slowdown is attributed to market events having only a short-term impact. Thus, short-term volatility is anticipated in the market, and even deeper corrections may follow if the token fails to hold the current level. A strong macro tailwind or ecosystem catalyst is needed to materialize the rebound.