XRP Faces Significant Drop Amid Broader Market Trends and Legal Challenges
Summary:
The value of cryptocurrency XRP has seen a significant drop of over 5.5%, bringing it down to $0.59. Influenced by various factors, including strong US manufacturing data, the reduction mirrors similar patterns in the wider crypto market. Large-scale XRP holders downsizing their portfolios further accelerate the decline. Year-to-date, XRP lags behind its competition, falling by -4.5% while the general market rose by 55.5%. An ongoing lawsuit by the SEC against Ripple also negatively impacts XRP. Despite the current downturn, further price fluctuations within the existing ascending triangle pattern might yield potential breakouts.
The value of XRP (XRP) has seen a decrease today, with a significant drop of over 5.5%, reducing the price to $0.59. This downfall is seen as a result of the uneven trade sessions that have been happening in the recent days. A review of the XRP/USD four-hour price chart can provide this information.
The sinking price of XRP, at first sight, can be attributed to a setback beginning back in March after the peak value of $0.59 was reached. From there on, it has seen a 18.5% slide downwards, which was fueled by a number of influential factors.
Manufacturing data in the United States has played a key role in pushing the XRP price downwards, reflecting a common trend in the crypto market as risk investors relook at their strategies amidst the anticipated reductions in interest rates by the Federal Reserve, spurred by a boost in U.S. manufacturing data.
There was indeed an increase in the manufacturing index by 2.5 points last month, reported by The Institute for Supply Management (ISM), pushing it just above the critical 50-point mark- a point that separates expansion from contraction. This minor increase has put an end to a 16-month long continual descent in manufacturing activity.
This robust data opens up the possibility of a reduced rate cut by the Federal Reserve to just about two this year, as compared to the earlier estimate of three.
An interesting point to note is that the swaps market currently projects almost 57% chances of a rate cut by the Federal Reserve in June, and about 70% possibility by September.
Typically, cryptocurrencies like XRP, that do not yield interests, gain an advantage when interest rates are sliced down as these digital assets become more appealing when compared to assets that do bear interests.
The reduction in XRP value today, and in the recent weeks, is in line with a downfall in the count of its wealthiest addresses.
Specifically, the number of entities in possession of more than 100,000 XRP has dropped by 1.13% up to now in 2024. This indicates that these "whales" are either selling or dispersing them across alternate addresses.
This sentiment is also shared by the owners of 100-10,000 XRP tokens, suggesting a reduction in the number of smaller investors, frequently termed as "fishes". On the contrary, the number of addresses that hold more than 10 XRP are witnessing a surge.
The actions carried out by large-scale XRP owners significantly determine the market perception and could result in a downfall in trader interest, especially in cases where they choose to sell large volumes of their holdings.
The performance of XRP has been disappointing all through 2024, lagging behind its leading competitors in the cryptocurrency market, with a performance value around -4.5% year-to-date, especially while the wider cryptocurrency market was soaring at 55.5% around the same time.
These revelations are mirrored in the XRP Dominance Index (XRP.D), a measure of XRP's market cap against the overall crypto market. The index has seen a downfall of 36.55% so far in 2024, indicating a continuous outflow of capital from XRP to other cryptocurrencies.
Primary reasons for capital outflows from XRP include the impending lawsuit by the U.S. Securities and Exchange Commission's (SEC) against Ripple. A U.S. District Court, in July, declared Ripple's XRP sales amounting to $728.9 million to hedge funds and other institutional buyers as illegal securities sales.
Last week, it was revealed by Stuart Alderoty, the chief legal officer at Ripple, that the SEC has requested a federal judge to impose a penalty of $2 billion on the blockchain company.
A detailed technical perspective on XRP is that the present price decline can be seen as a part of its fluctuations within an existing ascending triangle pattern. A weekly price chart of XRP/USD can provide a more detailed analysis.
Its next potential downfall could be along the triangle’s lower trendline, meeting at its 200-week exponential moving average (200-week EMA; the blue wave) near $0.52 by mid-April, a 15% drop from the current price levels.
On the other side, an upward breakout from the triangle's upper trendline could elevate the XRP price to $0.74, which was the peak price last time from March 11.
Investment involves potential risks, and each trading move must be made after thorough research. This article doesn't provide any investment advice or recommendations.
Published At
4/1/2024 7:43:03 PM
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