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XRP has been one of the weakest performers among large-cap cryptocurrencies recently. While many digital assets are facing a market-wide downturn, XRP’s price has taken a more significant hit, losing almost 30% of its recent gains and struggling to hold above the $2 mark.
Key Factors Behind XRP’s Decline
One of the major reasons for the ongoing price drop is the anticipation of XRP’s monthly token unlock. On January 1, 2025, 1 billion XRP tokens will be unlocked as part of Ripple’s operational funding strategy. Historically, such events often increase selling pressure, making traders cautious about price stability.
Additionally, macroeconomic factors are playing a role. The Federal Reserve recently announced a 25-basis-point interest rate cut. While this was expected, the Fed also issued a cautious forecast for 2025, reducing the expected number of rate cuts from four to just two.
However, Coinglass data shows a slight drop in XRP’s open interest, suggesting that some traders are closing their positions due to increased market volatility. This has added to the downward pressure on XRP’s price.
What’s Next for XRP?
In the face of a bearish market, XRP has failed to hold its key support level at $2.20 and has been stuck in a tight range for the past month. This is similar to a three-month consolidation phase earlier this year, which ended with a price rally in November.
If this pattern continues, XRP might not break above $3.00 until late February 2025. During this time, any large-scale selling could push the price down to $1.58, increasing losses for investors.
On the brighter side, a positive shift in the crypto market could change things quickly. If XRP breaks past the $2.73 resistance, it could rise to $3.00 and even aim for a new all-time high above $3.31.