XRP has certainly had its ups and downs lately. After a remarkable surge of 468% between election day and its peak on December 3, the token faced a sharp decline last week. By press time, XRP had experienced a 19% drop, bringing its price down to $2.30 on December 24. This decline wiped out an astonishing $20 billion from its market capitalization, which plummeted from $152 billion to $132 billion.
What caused this massive value plunge? Interestingly, it’s not just the XRP community or specific events tied directly to the token that can be blamed. Instead, this downturn reflects a broader trend within the cryptocurrency market that took a hit following the latest meeting of the Federal Open Market Committee (FOMC).
On the one hand, the Federal Reserve’s announcement of a 25 basis points (BPS) interest rate cut was expected. However, what shook investors were the revelations that projected 2025 inflation rates had increased from 2.1% to 2.5%, coupled with suggestions that fewer rate cuts would happen over the next year. As a result, investors hit the panic button, leading to a temporary market wipeout of around $1.5 trillion and a staggering $7 billion loss in XRP within just 24 hours, as reported by Finbold on December 19.
Now, let’s clarify that while the Federal Reserve’s actions had a hand in this debacle, they’re not the sole reason for XRP’s struggles. In fact, its stagnation began weeks ago, well before this latest downturn. Overall, XRP seemed to run out of steam by early December, and trading has flatlined since then.
Looking ahead, could there be hope for a rebound in 2025? The landscape may shift positively as we head into the New Year. The Santa Claus rally often brings renewed buying activity, and January could introduce favorable conditions for XRP. Notably, two developments stand out: Donald Trump is set to take office again, and his administration is anticipated to adopt a more crypto-friendly stance. Moreover, Gary Gensler, the current SEC chair, is scheduled to step down on January 20, potentially paving the way for a swift and favorable resolution to Ripple Labs’ long-standing legal battle.
With this mix of challenges and potential opportunities, the next few weeks could be critical for XRP and its community. As we look ahead, the cryptocurrency world is watching closely – hopes remain alive for a brighter future for XRP in 2024 and beyond.
