XRP Faces Downward Momentum Amidst Market Shift

Despite an admirable run starting in November, XRP is now experiencing significant price declines.

In the second to last week of December, XRP’s market cap dropped by $20 billion, from $152 billion to $132 billion. Unfortunately, this downward trend continued, and by December 30, the market cap further receded to $116 billion, losing $6 billion in just hours.

At press time, XRP was trading at $2.03, down 25.09% from its December 2 high of $2.71. Year-to-date (YTD) gains are at 230.84%, but the token has reduced by 5.88% daily, driven by strong volume.

XRP’s Critical $2 Psychological Barrier

The $2 mark represents a vital psychological level; a significant drop beneath it could reinforce bearish sentiment. Given the impressive YTD returns, taking profits or reinvesting in rising assets is a logical move.

XRP is likely to fall below $2 soon, causing a prolonged decline. However, as the fourth-largest cryptocurrency, this drop is expected to be temporary. Factors affecting XRP include Ripple Labs’ escrow system, which unlocks 1 billion XRP tokens on the first day of every month. This forthcoming selling pressure is expected to push prices down.

XRP’s performance will likely align with the overall crypto market, primarily influenced by Bitcoin (BTC). Despite anticipating fewer Federal Reserve rate cuts in 2025, the fundamental premise for the current bull run remains largely unchanged, suggesting that an uptrend will eventually resume.

Additionally, with Gary Gensler’s chairmanship concluding, the approval of XRP spot exchange-traded funds (ETFs) seems increasingly likely, potentially stabilizing price movements.

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