The price of XRP fell on Wednesday as a sea of red spread across the cryptocurrency industry ahead of the Federal Reserve’s decision.
Ripple (XRP) fell more than 5%, erasing most of the gains made on Tuesday following the launch of stablecoin RLUSD.
The decline resulted in significant liquidation of bullish positions totaling over $15.19 million. Liquidations occur when exchanges automatically close positions due to insufficient margin. Short positions worth more than $4.6 million were also liquidated, according to CoinGlass.
Ripple’s long-awaited retreat, occurred the day after the company launched the RLUSD stablecoin. The stablecoin is off to a strong start as it has attracted over $53 million in assets, according to CoinMarketCap. Its 24-hour volume was over $550,000.
The RLUSD stablecoin faces stiff competition in an already saturated market. Tether remains the dominant stablecoin with over 60% of the market, followed by USD Coin, Ethena USDe, USDS and Dai. Other notable stablecoins include First Digital USD and Justin Sun’s USDD.
History shows that even high-profile stablecoin launches can be challenging. For example, PYUSD PayPal has a market capitalization of $447 million, despite the company’s massive presence in the fintech space. Similarly, USDD, launched in 2022, has stalled at $745 million over the past two years.
The decline in XRP prices may reflect profit-taking following the launch of RLUSD and nervousness about the Federal Reserve’s final interest rate decision for the year. Economists expect a hawkish cut, with the Fed cutting rates by 0.25% while signaling a potential pause in 2025. Concerns arise from President-elect Donald Trump’s inflationary policies, such as deportations and tariffs.
However, XRP has potential catalysts. The new Securities and Exchange Commission may reject its appeal and approve the spot ETF. Ripple Labs may also decide to file for an initial public offering.
XRP Price May Form Risky Patterns
The daily chart shows that XRP can form two risky patterns. First, on Tuesday it formed a shooting star candlestick pattern, which consists of a small body and a long upper shadow, which often signals a bearish reversal.
Additionally, XRP price may form a double top pattern at $2.89. This pattern is marked by two peaks and a neckline that lies at $1.8958, the lowest level this month.
As a result, there is a risk that XRP could continue to decline over the next few days as part of mean reversion, given that it remains well above the 50-day moving average. More sustained growth will be confirmed if the XRP price exceeds the yearly high of $2.89.
