XRP Price Prediction: Wednesday’s Interest Rate Decision Could Push XRP Below $1.26

XRP (XRP) recovered once again during the weekend, and bulls have kept trying to break past the $1.31 ceiling.

The fact that they have failed two times already, including this session, could indicate that the selling pressure persists.

That could ultimately result in a bearish breakout below the $1.26 area — a level that we see as the last line of defense for bulls to prevent a stronger decline to the $1.12 area.

Trading volumes have jumped a bit during today’s session, rising by 38% in the past 24 hours to $1.7 billion. Although volumes are still thin at 2% of XRP’s circulating market cap, this spike signals that the market is once again turning its eyes to altcoins ahead of the Fed’s meeting.

Market Participants Don’t Expect a Rate Hike on Wednesday

The consensus is that the Fed will delay its rate hike to December. Odds of a rate hike during Wednesday’s meeting currently sit at 13% according to data from FedWatch.

Any surprises on that front, meaning a premature hike, could plummet the price of crypto assets below their nearest support levels and into areas not touched in months.

In regard to the macro backdrop, James Butterfill from CoinShares recently commented: “Spot demand is improving, Bitcoin has absorbed equity volatility reasonably well, and housing weakness gives the Fed some room to wait.”

He added: “But inflation remains the binding constraint, and the next move in crypto is still likely to be dictated more by rate expectations than by any single sector-specific catalyst.”

Hence, this week’s rate decision and subsequent speech from the head of the central bank, Kevin Warsh, will be carefully scrutinized by market participants to get a sense of what to expect for the next meeting.

Social Volumes Send Bearish Signal for XRP

After posting a bullish crossover in mid-September, social mentions for XRP have plummeted once again, indicating fading retail interest.

This is bearish and could result in lower organic demand, especially if the token loses its $1.26 support.

The last bearish crossover we got between the 30-day and 200-day moving averages for social mentions resulted in a 12% drop for this altcoin in just a few days.

If you are a buy-and-hold investor or hold a profitable position in XRP at the time, this might be a good time to hedge or cash out to prevent losing those hard-earned gains.

XRP Could Drop by 12% If It Breaks Below $1.26

Turning to the 4-hour chart, we can see how a move above our pivotal level at $1.31 has been rejected twice following a bearish breakout below this level on Friday.

Recovering this price zone is critical for bulls if they wish to keep the rally alive. Strong demand persists at $1.26. However, the more this level is hit, the higher the odds that it will break.

Meanwhile, momentum readings have improved a bit, as the Relative Strength Index (RSI) once again crossed above the signal line.

If a bearish breakout occurs, the most likely landing zone would be the $1.12 area, as a big market imbalance sits at that level and those areas tend to be a magnet for the price.