XRP Price News: 16% Downside Risk After Losing $2 Support

XRP (XRP) has dropped by 10% in the past 24 hours to $1.9, as today’s crypto liquidations could make it to the top 10 list of worst days for traders.

Data from CoinGlass shows that $2 billion worth of long positions have been flushed out of the market in the past day, as Bitcoin (BTC) nears $80,000 and Ethereum (ETH) drops below $2,700.

Crypto Liquidations – Source: CoinGlass

Meanwhile, trading volumes have jumped by 62% during this period for XRP, now accounting for more than 8% of the token’s circulating supply.

Investors have panicked as a result of the Federal Reserve’s change of heart concerning its December interest rate decision. Chairman Jerome Powell stated after the previous FOMC meeting that another rate cut was “far from certain”.

Credit Crisis Looms as Banks Pile Into the Fed’s Emergency Funds

In addition, the credit market in the United States seems to be under pressure as the New York Fed called an emergency meeting last week to discuss the situation of top Wall Street banks, as repo usage increased overnight in late October.

Fed’s Emergency Repo Usage – Source: New York Federal Reserve

This has been interpreted as a potential “canary in the coal mine” sign, meaning that it could have revealed looming issues in the credit market that have gone unnoticed until now.

A brewing credit crisis explains the market’s latest sell-off, as investors could be bracing for a wave of negative sentiment.

However, this could have been a sell-fulfilled prophecy as sentiment is already heavily depressed. In this regard, the Fear and Greed Index has dropped to its lowest level since this sentiment gauge was launched by CoinMarketCap in June 2023.

At the time, the Index sits at 11. Before this, the lowest reading on record was 15. This highlights the extent of the panic-selling. Interestingly, the last time the F&G Index hit a low of this magnitude, the market started to recover.

New XRP ETFs Confirm Growing Institutional Interest

Is the “smart money” about to come in to scoop up these tokens at a bargain? As retail investors capitulate, the odds of a rebound increase, especially at a point when Wall Street’s interest in cryptos like XRP is rising.

This week, another spot exchange-traded fund (ETF) for this altcoin hit the trading floor. This time, it was Bitwise’s turn to launch its product. In just a couple of days, the vehicle has increased its assets under management (AUM) to $100 million.

Alongside this fund, Canary Capital also launched its XRPC ETF, and others, including 21Shares and CoinShares, will soon get theirs listed.

This is a key signal that mainstream adoption could accelerate over the next few years as cryptocurrencies become accessible to both retail and institutional investors through regulated markets.

In the meantime, XRP downside risks are big. The token could drop by another 16% as it broke below its 50-week exponential moving average (EMA).

XRP/USD Weekly Chart (Bitstamp) – Source: TradingView

The $1.60 level has acted as a strong support two times. If XRP breaks below this mark, the odds favor an explosive downturn that could wipe out most of the gains that the token experienced in November 2024.

The Relative Strength Index (RSI) has dropped below the 14-week moving average (EMA), and it is nearing its lowest point since July 2024.

With market sentiment standing at heavily depressed levels, contrarian traders may be the ones who make the most at this point in the cycle if things turn around.

However, the risk of a deeper correction exists, especially if a credit crisis is confirmed.