XRP has seen a significant price drop, erasing gains from the past two weeks. This decline is attributed to several factors, including delays in the Ripple versus SEC lawsuit and diminishing expectations for a September interest rate cut.
SEC Delays Closed-Door Meeting
The highly anticipated closed-door meeting between the United States Securities and Exchange Commission (SEC) officials, scheduled for August 1, was unexpectedly canceled. This meeting had attracted the attention of crypto traders, who speculated that it might lead to a resolution with Ripple. However, no specific explanations for the delay have been offered by either Ripple or the SEC, leaving the crypto community in suspense. As a result, XRP’s price has declined by up to 10.75% since August 1, including a 6.75% drop today.
XRP/USD daily price chart. Source: TradingView
Decreasing Odds of September Rate Cut
XRP’s losses are also part of broader declines in the crypto market, driven by decreasing odds of an interest rate cut in September. As of August 2, CME data showed a 71.50% probability for a 25 basis point rate cut in September, down from 88.2% a week ago. This decrease followed Federal Reserve Chair Jerome Powell’s press conference on July 31, where he stated that any dovish decision would depend on inflation cooling down. XRP’s price has declined by up to 15.35% since Powell’s press conference, indicating that many crypto traders are securing profits amid uncertainties about the rate cut.
Source: SEC
Ripple’s 1 Billion XRP Unlock Scare
Ripple has moved over a billion XRP in the past 24 hours as part of a scheduled fund release from escrow. Whale Alert reported large transfers in and out of Ripple’s escrow wallet. As of August 2, 500 million XRP had been moved out of the escrow account in two tranches, increasing the supply on the market. If demand doesn’t rise to match this influx, it can lead to downward pressure on prices. However, Ripple may re-lock a significant portion of the newly released XRP, as it did following the June 1 unlock.
Bearish Divergence and Technical Analysis
Today’s XRP losses are part of a broader correction following a bearish divergence signal on the daily chart. This occurs when the price forms higher highs but its momentum indicator, the relative strength index (RSI), forms lower highs, indicating a lack of upside momentum. As of August 2, XRP is testing its 0.5 Fibonacci retracement level at around $0.571 as support, eyeing a rebound toward the next Fibonacci line at around $0.607. A break below the $0.571 support could lead to a test of the 50-day and 200-day exponential moving averages (EMAs) around $0.54, aligning with the 0.382 Fib line.
