The XRP price continued its strong downward spiral this month, moving to a low of $2 as investors waited for the upcoming Federal Reserve interest rate decision, which will come out on Wednesday. Ripple token was trading at $2.05, down by over 40% from its highest point this year. So, will it rebound ahead of the Fed decision?
Federal Reserve to cut interest rates
The market belives that the Federal Reserve will cut interest rates by 0.25% on Wednesday, continuing a trend it started three months ago. This cut will bring the benchmark rate to between 3.50% and 3.75%, the lowest level since 2022 when it started hiking to counter the soaring inflation.
Bitcoin and other altcoins like XRP and Ethereum should do well when the Fed is cutting interest rates. Besides, the cut comes at a time when the market is waiting for the upcoming Santa Claus rally, which normally happens before Christmas Day.
However, there is a risk that the XRP price may continue its downward spiral when the Fed cuts this week. For one, the Fed cut will not be a big news to market participants as it has been priced in, with Polymarket data showing odds of over 95%.
Therefore, there is a risk that the market will sell the news when the Federal Reserve cuts interest rates in this meeting. For one, the bank may deliver a hawkish rate, with dissent from officials rising, with most of them pointing to the relatively high inflation rate in the country.
XRP ETF inflows continue
Meanwhile, the XRP price is reacting to the ongoing ETF inflows, which are now nearing the important milestone of $1 billion.
Data compiled by SoSoValue shows that the ETFs have never had a day in the red. They added over $38 million in inflows on Monday, higher than Friday’s $10 million. This increase brought the total amount of money to over $935 million, and the net assets held by these funds to $923 million.
The Canary Capital XRPC continues to have the first mover advantage as its assets have jumped to over $346 million, much higher than Grayscale’s GXRP, which has accumulated $218 million in assets. Most of the inflows on Monday were on Franklin Templeton’s XRPZ, which had $15.2 million.
JPMorgan and other companies believe that XRP ETFs will continue to accumulate inflows in the coming months, with the cumulative figure coming in at over $8 billion in the first year.
The XRP price also reacted to a report by Bloomberg on how Citadel and Fortress hedged their recent investment in Ripple, which valued it at $40 billion. These companies believed that most of Ripple’s market cap was derived from its XRP holdings, with the core business being much smaller.
XRP price technical analysis
The three-day chart shows that the XRP price has been under pressure in the past few months as it crashed from the all-time high of $3.66 to the current $2.05.
It formed a double-top pattern at $3.3890 and a neckline at $1.6125, its lowest level on April 7 this year. It has also moved below the 50-day Exponential Moving Average (EMA) and is at the 50% Fibonacci Retracement level.
Top oscillators like the Relative Strength Index (RSI) and the MACD have continued moving downwards.
Therefore, the most likely scenario is where the XRP price continues falling as traders target the next key support level at $1.6125, the 61.8% Fibonacci Retracement level.
On the positive side, the coin has formed a falling wedge pattern, which is made up of two descending and converging trendlines. This pattern may lead to a strong bullish breakout in the coming days or weeks.
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