XRP price continues to dip post RLUSD launch – Is the reception that bad?

XRP’s price has sharply retraced following the announcement of its RLUSD stablecoin launch. After going as high as $2.73, the coin plummeted by more than 18% merely 24 hours after Ripple’s stablecoin went live. 

On December 17, the highly anticipated stablecoin RLUSD was unveiled, sparking a significant rally in XRP’s price. At the start of the week, XRP was trading around $2.35. 

On Monday evening, after Ripple’s announcement of the RLUSD launch scheduled for the following day, XRP’s price skyrocketed to nearly $2.6. The cryptocurrency surged again, reaching a multi-week high of $2.73 on the launch day.  

Despite the strong bullish trend, XRP struggled to sustain its gains. As the broader market corrected, XRP’s price began to pull back, falling to $2.41 at the time of this publication, while the market-wide drop intensified. 

Fed rate cut causes market bloodbath 

The market-wide correction was partly driven by the Federal Reserve’s decision to cut interest rates by 25 basis points. This move, though widely expected, set off a wave of panic selling across the crypto space. The recent rate cut triggered a sharp decline across all major cryptocurrencies, and XRP was no exception, dropping to a seven-day low of $2.19.

XRP had gained over 130% in the past month, only to lose substantial ground following the market’s downturn. According to analysts, the real cause for concern was not just the rate cut itself but the realization that inflation could persist longer than anticipated, and the Fed may not be ready to ease its tightening measures. 

One market analyst said, “It wasn’t today’s 25 bps cut that made markets freak out, it was the realization that inflation might stick around longer.”

The Fed isn’t unanimously in favor of these cuts. That one sentence sent the US dollar soaring to levels we haven’t seen since 2022. When the dollar climbs, risk assets like Bitcoin and crypto tend to slide—and that’s exactly what happened.

RLUSD’s market activity hasn’t been “intense,” even though Ripple did predict supply shortages post-launch. 

As RLUSD goes live, there may be supply shortages in the very early days before the market stabilizes. There actually is someone willing to pay $1,200/RLUSD for a tiny fraction of one RLUSD. Tools will show you the highest price anyone is willing to pay, even if it's just for a… https://t.co/LOx4rGiiiJ

— David "JoelKatz" Schwartz (@JoelKatz) December 15, 2024

According to CoinMarketCap data, the stablecoin’s trading volume in the last 24 hours is slightly above $600,000 at press time.

Crypto market crash imminent?

Bitcoin saw a significant drop in the past 24 hours, with its price falling by as much as 3% to a low of $102,000. The plunge in BTC prompted panic selling, triggering losses across other top cryptocurrencies. Ethereum, for example, extended its loss to two days, dipping below $3,800 and marking a 4.5% drop over the last 24 hours.

Dogecoin (DOGE), Cardano (ADA), and Solana (SOL) each experienced declines of 6%, 5.7%, and 3.2%, respectively, over the last day. Overall, market sentiment has been marked by uncertainty, with some analysts suggesting that volatility could persist until the dust settles.

The downturn has also led to massive liquidations in the crypto derivatives market. According to data from Coinglass, approximately $792 million worth of positions were liquidated in the past 24 hours, with long positions accounting for $661 million of that total.

Leading the charge was BTC, which had $149 million in liquidations, followed by ETH and XRP, which had $126 million and $42 million, respectively. 

However, analysts such as Ali are cautioning investors to avoid panic selling. “Markets hate uncertainty, but they also thrive on it when the dust settles,” he noted, urging caution and suggesting that patience may be required for a potential recovery.

Land a High-Paying Web3 Job in 90 Days: The Ultimate Roadmap