XRP Price Plummet: What’s the Cause?

The price of XRP has been steadily declining in recent weeks, and this trend continues on January 23rd with a drop of over 4% to $0.50. There are multiple reasons for this decrease, including technical factors and market sentiment. From a technical standpoint, XRP’s decline is part of a larger downtrend that typically begins when the price tests a multi-month descending trendline resistance. This happened on December 28th, and since then, the price has fallen by about 25%. Currently, XRP is approaching a multi-month ascending trendline support, which has historically signaled the start of a recovery. However, the bearish momentum and the price trading below key moving averages indicate potentially oversold conditions.

In addition to technical factors, the decline in XRP’s price today is also influenced by the speculation surrounding the launch of a spot XRP exchange-traded fund (ETF). Many in the market were hopeful that BlackRock, the largest asset manager in the world, would launch such a product, but these expectations were dashed when the firm clarified on January 18th that they had no plans to do so. This news has contributed to a drop in XRP’s price by over 13% since the clarification.

Furthermore, Ripple, the company behind XRP, is currently facing legal disputes with the U.S. Securities and Exchange Commission (SEC), which adds to the uncertainty surrounding the cryptocurrency. The SEC has demanded financial statements from Ripple and a lawsuit is scheduled for April 2024. These regulatory challenges have dampened investor enthusiasm and may be a factor in the recent sell-off.

Additionally, there has been a decrease in the supply of XRP held by the wealthiest investors, while the supply held by investors with smaller balances has increased. This suggests that the larger holders have been actively selling or redistributing their XRP holdings.

Overall, the price decline of XRP can be attributed to a combination of technical factors, market sentiment influenced by the speculation around a spot XRP ETF, regulatory challenges faced by Ripple, and changes in the distribution of XRP supply among investors.