XRP has succumbed to pressure on December 10, dropping 3.14% to $2.0412 as the Federal Reserve’s recent interest rate announcement sent ripples through the crypto market. The token opened the day with optimism, briefly hitting $2.1097 after the Fed revealed a 25 basis point cut in rates. However, the market quickly shifted as investors digested the implications of the Fed’s economic outlook.
The Federal Reserve’s decision to lower the target interest rate to a range of 3.50%-3.75% initially pleased traders. Yet, the Fed’s projections hinted at a more hawkish stance than anticipated, with only one rate cut expected in 2026 instead of the previously suggested two. This reassessment raised concerns about the persistent inflation forecast remaining above the targeted 2% until 2028, leading XRP to plummet to a session low of $1.9936 shortly after the announcement.
In a parallel development, XRP-spot ETF inflows witnessed a sharp decline. On December 9, inflows fell to $8.73 million, down from a robust $38.04 million just a day prior, with Franklin’s XRPZ ETF reporting zero inflows for the first time since its inception. This slowdown appears to reflect a conservative approach from institutional investors in light of the looming Fed decision. In contrast, Bitcoin spot ETFs surged, attracting $151.9 million in net inflows on the same day.
Despite this one-day decline, XRP-spot ETFs have garnered total inflows of $277.5 million in December, significantly overshadowing Bitcoin ETFs, which have only managed $3.8 million. This indicates that institutional interest in XRP remains strong, despite the recent halt in inflows.
On Capitol Hill, negotiations surrounding the crypto market structure legislation have reportedly stalled as Democrats and Republicans grapple with critical matters such as token classification and stablecoin regulations. The Democratic party has unveiled a counteroffer outlining their key priorities, but substantial gaps remain in resolving fundamental disagreements. Historically, positive legislative outcomes have often led to spikes in XRP’s momentum, as observed in July when the token rallied 14.69% after a favorable bill passage in the House, reaching an all-time high of $3.66.
In a potentially bullish note for XRP, Ripple’s application for a US-chartered banking license is still under review by the Office of the Comptroller of the Currency. Approval of this license could provide Ripple with a significant advantage in the U.S. regulatory landscape, fostering a more favorable environment for XRP.
As it stands, XRP finds itself testing crucial support at the $2.00 level, with immediate resistance noted at $2.05 and higher levels near $2.10 and $2.22. A breakdown below $2.00 could push XRP toward an even lower support level around $1.9850. Meanwhile, with the Fed’s anticipated resumption of Treasury purchases after December 12, the potential for increased liquidity could rekindle demand for riskier assets, including cryptocurrencies.
In the ever-evolving crypto landscape, XRP continues to face headwinds but holds potential for recovery amid legislative developments and institutional interest. Only time will tell if XRP can decisively breach through resistance levels and regain upward momentum amid the shifting sands of economic policy and regulation.
