XRP (XRP) has shed 21% of its value in the past week, outpacing the losses that all other tokens in the top 10 have experienced during this period.
This altcoin is now nearing the $1 area, as both the political and macroeconomic landscape have shifted dramatically.
Odds of a rate hike in December continue to be nearly 100%. However, the market is now expecting that the U.S. Federal Reserve will get increasingly hawkish, as inflation in the country came in above the market’s estimates for October.
Last month, the Core Consumer Price Index (CPI) rose by 0.3% compared to the previous month, exceeding analysts’ forecasts by 10 basis points.
One of the Fed’s Governors, Christopher Waller, emphasized during a recent speech that he would advocate for more aggressive actions if inflation keeps rising.
Moreover, President Donald Trump said today that a deal in Iran is not necessary. His comments immediately pushed the price of oil higher. The market is currently in full-on risk-off mode as geopolitical tensions in the Middle East persist.
Sentiment has soured dramatically as well within the crypto market, as indicated by the Fear and Greed Index. This gauge is now nearing “Extreme Fear” territory, just two and a half months after hitting Extreme Greed.
Market Ignores All Positive Project-Specific News as Bearish Sentiment Takes Over
The market is fully ignoring all positive developments concerning Ripple and XRP, as the overall narrative is now entirely focused on the geopolitical landscape, inflation, and interest rates.
However, we have seen interesting growth in terms of adoption and use cases for the XRP Ledger that could pave the way for a higher valuation in the long term.
For example, Ripple recently got approval from the Office of the Comptroller of the Currency (OCC) to launch a national bank. This green light comes at a point when adoption of Ripple USD (RLUSD) as an on-chain settlement asset is accelerating.
Moreover, validators within this blockchain have been voting for the launch of a lending protocol that would use XRP as collateral and RLUSD as the settlement asset. This proposal has now been voted yes by 62%, and it is rapidly getting close to the 80% threshold required to be implemented.
The fact that all of this is being ignored is clear evidence that we have entered another bearish phase. When sentiment improves, these elements could play in favor of a higher valuation for XRP. However, they will likely be ignored or downplayed until that happens.
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See all Ripple forecastsXRP Could Erase All Of Its Trump-Era Gains If It Loses This Key Support
Turning to the daily chart, we can see that XRP is about to fully fill the last fair value gap (FVG) from August, as we recently predicted. This indicates that buying interest has evaporated for the time being.
We may now see the token dipping to the $1 area first, and potentially break below that mark to start dipping toward areas not touched since November 2024.
As we stated in a recent article, the fact that President Trump now has his hands tied when it comes to passing supportive legislation for the crypto sector could eventually erase all of XRP’s gains dating back to the Presidential election, meaning a huge downside risk as the token could drop to around $0.50 – $0.60 in the next few months.