XRP (XRP) was pulled down near its session lows today at $1.36 following a disappointing inflation report in the United States.
According to data from the Bureau of Labor Statistics, core inflation rose by 0.3% compared to the previous month, exceeding analysts’ estimates for September by 10 basis points.
Meanwhile, the annualized variation in the Consumer Price Index (CPI) jumped from 3.4% in August to 3.7% last month, as higher energy prices continue to put pressure on prices.
This higher-than-expected CPI print had a strong influence on the market’s baseline scenario concerning the Federal Reserve’s interest rate decisions.
Odds of a rate hike in October doubled from 22% before the report came out to 44% afterward. This typically has a bearish impact on the price of risky assets in the near term, and could result in the continuation of the downtrend that cryptocurrencies have been experiencing lately.
XRP Ledger Foundation Patched a Massive Vulnerability This Week
Long liquidations are still relatively low at less than $200 million but could accelerate during the session if prices keep plummeting.
Meanwhile, net inflows to spot exchange-traded funds (ETFs) linked to XRP have stood at $0 for three days in a row, as this latest pullback may have spooked investors, especially ahead of the release of today’s inflation report.
Recently, the XRP Ledger Foundation uncovered a technical bug that may have allowed unauthorized parties to mint as many XRP tokens as they wanted, to the point of threatening to break the token’s hard-capped maximum supply of 100 billion XRP.
The Foundation clarified that on-chain data confirmed that the vulnerability was not exploited by bad actors. However, the incident resembled a similar security flaw found on the Zcash blockchain months ago and emphasized the persistent vulnerabilities that still plague the industry.
Meanwhile, Evernorth, the world’s largest digital asset treasury (DAT) for XRP, debuted on Wall Street this week. The price of its stock, whose ticker symbol is XRPN, is trading 6% lower during the pre-market session following the release of the CPI’s report.
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See all Ripple forecastsXRP Risks a Big Drop If It Loses the $1.25 Support
We continue to see the $1.32 area as the most relevant support to watch in the near term for XRP.
The token broke below its 200-day exponential moving average (EMA) once again on Monday. This is a risk factor to consider as it endangers the market’s overall perception that this altcoin has entered a bull market.
If the selling spree accelerates during the American session and the $1.32 support is broken, we could expect a strong decline to $1.25 in the near term, meaning an 8% downside risk.
That demand zone would be the last line of defense for bulls to prevent a catastrophic decline to at least $1.10.
The macroeconomic backdrop continues to be challenging, as persistent tensions in the Middle East will likely keep inflation at high levels, prompting the Fed to hike rates one or two times in the next 12 months.
That’s the biggest challenge to overcome for what we perceive as the early stage of a bull market for cryptos.
