After several months of a consistent decline in market price, XRP has resumed its downtrend with a fall of 1.53% in the last 24 hours. This week marks XRP’s lowest level since December, extending its weekly loss to 16.99%.
The fall of XRP mirrors the market stress induced by Bitcoin’s downturn, which is affecting the entire cryptocurrency market and throwing altcoins off balance. This highlights the high sensitivity of XRP, as a major altcoin, to external factors such as macroeconomic instability, regulatory measures, technical factors, and market sentiment.
The Trigger: The Broad Market Sell-Off & the Fragile Sentiments
As Bitcoin has fallen and is currently trading around $78,000, the overall crypto market is facing heavy selling pressure. A wave of ‘extreme fear’ sentiment, ranked 14 on the Fear & Greed Index, is pulling the market down further. As investors are affected by this fear and move toward risk-off positioning, the market turns to altcoins to rotate capital, amplifying their sensitivity to market dynamics.
The Black Sunday II Effect: Catalyzing the XRP Slide
As the global crypto market sank 2.36% in the last 24 hours, altcoins like XRP became highly volatile. The risk-off sentiment, driven by market-wide weakness due to spiking U.S. bond yields, activated stop-losses and catalyzed the downtrend.
The violent market downstream was further accelerated by extreme futures liquidations. This enormous liquidation episode erased over $2.2 billion in future positions. The accumulation of long positions with high leverage, expecting a bounce over $1.80, triggered a chain of stop losses when XRP hit $1.75. This cascading effect resulted in the speeding up of the decline.
Delays in the Progress of Market Stall Bills: Critical for XRP
The crypto-related legislative developments are influencing the market sentiments, affecting the market trends. The fading bets on a Fed rate cut, along with the regulatory uncertainty of the Senate passing a crypto-friendly legislation, oppose a bullish outlook, further driving the bearish trend for XRP.
The declining expectations of the Fed rate cut, as well as the delays in the regulatory developments, reduce the demand for XRP ETFs, resulting in a massive ETF outflow.
Despite Ripple crossing a crucial regulatory milestone by securing a full Electronic Money Institution (EMI) licence in the European Union from the CSSF, the XRP market price continues to fall.
The Cushioning Effect of Institutional ETF Holding
While the prices are steeping down continuously, the analysts find the support level at $1.50 – $1.60 as a crucial one. The support level is created by an institutional floor, which emerged when the ETF issuers like Bitwise chose to absorb liquidity rather than sell assets. This also created a utility floor as the on-demand liquidity remained high.
Technically, XRP is at a ‘do or die’ level, which calls for proof as the expectations are significantly lowering. Analysts are carefully watching over the ‘golden pocket’ at the $1.50 – $1.60 range, as holding this level could turn out to be a high-reward entry point to return to $1.80. If the market fails to hold here, the crash might go deeper.
What is the Future of XRP Holding?
The US Senate’s passing the Market Structure Bill would bring light to its path. However, XRP is not easy with a ‘waiting’ or ‘invest and forget’ kind of sentiment. The sudden fluctuations in the market price and the relative underperformance and price drops make XRP a high-risk asset for long-term holding.
XRP is highly sensitive to regulatory developments. The geopolitical crises, the US economic indicators, macroeconomic backdrops, the technical vulnerabilities, and XRP ETF Flows – all these seem to influence the price trends of XRP significantly.
