Why is XRP price dropping today?

XRP (XRP) prices are down today, reflecting trends elsewhere in the cryptocurrency market as traders await the Federal Reserve’s interest rate decision in a week.

XRP prices are falling amid increasing dollar strength

On July 24, the price of XRP fell by 8% to $0.68, beating the crypto market’s 3.5% decline on the same day. The XRP/USD pair declined in the middle growing expectations that the Fed will raise interest rates by 25 basis points in its July 25-26 meeting.

XRP/USD versus crypto market daily performance chart. Source: TradingView

The higher rate environment is considered bad for cryptocurrencies like XRP. As a result, some traders have exited high-cap cryptos to seek refuge in safer assets such as the US dollar, selling off at the peak of a Ripple-led market rally on July 13.

For example, XRP price rose 75% on July 13 but was unable to extend its gains above $1. Since then, the token price has fallen by 28%. On the other hand, the US dollar index (DXY) is up nearly 2% over the same period.

Meanwhile, the correlation coefficient between DXY and XRP was -0.79 on July 24 compared to +0.25 on July 13, suggesting a bigger downside to XRP if the dollar continues to rise in the coming months.

Daily correlation coefficient between DXY and XRP. Source: TradingView

What’s next for XRP price in July?

From a technical perspective, XRP has entered an overbought correction stage after its weekly relative strength index (RSI) rose to 72, its highest level since April 2021, last week.

XRP/USD weekly price chart. Source: TradingView

A bear scenario would see XRP price drop towards $0.59 in July or early August. This level was support during the July 2021-January 2022 session and is also the 0.236 Fib line of the token’s Fibonacci retracement chart (pulled from a $1.15 swing high to a $0.30 swing low).

Related: XRP price could fall 40% in September — Fractal analysis

Conversely, a decisive close above the 0.382 Fib line near $0.77 could see XRP retesting the $1 resistance to gain around 30% from its current price level.

This article does not contain investment advice or recommendations. Every investment and trading step involves risk, and readers should do their own research when making decisions.

Related Articles

Back to top button