What factors are contributing to the decline in XRP price today?

The price of XRP (XRP) has decreased today, reflecting trends seen throughout the cryptocurrency market as traders process the latest remarks from the Federal Reserve.

The XRP token has been under continuous pressure since July 20, when it reached its peak since April 2022, fueled by hopeful expectations stemming from Judge Analisa Torres’ ruling that certain aspects of the token sale were not classified as a securities issuance. The ruling indicated that secondary sales of XRP do not qualify as an investment contract, a vital element of the U.S. Securities and Exchange Commission’s (SEC) allegations.

XRP token price index in USD, 12-hour chart. Source: TradingView & Cointelegraph

Despite this favorable development, the upward trend that drove XRP’s price to $0.83 quickly reversed. Investors came to realize that the ruling could potentially be overturned by higher courts. It became clear that the decision only exempted Ripple and its founders from selling through exchanges or directly interacting with institutional investors.

Shortly thereafter, on July 31, Judge Jed Rakoff from the Southern District Court of New York dismissed Terraform Labs’ attempt to quash a lawsuit initiated by the SEC. This dismissal also overturned the earlier ruling made by U.S. District Judge Analisa Torres, who had determined that Ripple’s sale of XRP tokens on public exchanges did not breach securities laws.

In the following five days, XRP experienced an 11.3% price correction, falling to $0.63. This decline mirrored the worsening regulatory landscape and diminished investor enthusiasm for holding XRP. Additionally, other recent developments have heightened investor apprehensions, leading to a further 6% drop in XRP’s price between August 14 and August 16.

Possible SEC appeal

While the SEC has filed an interlocutory brief to formally indicate its intention to contest Judge Analisa Torres’ ruling, Stuart Alderoty, Ripple’s Chief Legal Officer, contended that the SEC is not presently entitled to appeal. This is why they are requesting permission for an appeal, and Ripple is expected to submit its response to the Court in the coming week.

In a recent conversation on Tony Edward’s Thinking Crypto Podcast, James Seyffart, an ETF analyst at Bloomberg, noted that the listing of XRP futures on the CME, which he considers unlikely to occur soon, would need to happen prior to any potential ETF launch. As a result, the analyst tempered expectations for an XRP spot ETF to materialize.

Related: XRP price can fall 40% by September — Fractal analysis

Macroeconomic uncertainty impacts XRP’s performance

From a broader perspective, it could be suggested that investors are exhibiting a greater level of caution. This change may be linked to the effects of the U.S. Federal Reserve’s measures aimed at controlling inflation, which are starting to influence the economy by increasing financing costs. Notably, investor Kevin O’Leary has remarked on a slowdown in lending and a rise in borrowing costs for small enterprises. He has also highlighted emerging weaknesses in regional banks.

O’Leary further indicates that the Fed may persist in raising interest rates due to the ongoing presence of inflationary pressures. He specifically questions the potential effects of the expenditures associated with the Inflation Reduction Act and the CHIPS Act. O’Leary emphasizes that a significant amount of money, nearly a trillion dollars, remains unspent. “That money has not been deployed yet, Larry, that’s close to a trillion dollars,” O’Leary stated.

In light of these conditions, and considering Ripple and the XRP token are facing their own challenges in an environment that is not favorable for risk-on assets, the probability of further price correction appears to increase. Thus, a retest of the $0.54 level, which served as resistance in June 2023, seems quite plausible.

This article does not provide investment advice or recommendations. Every investment and trading decision carries risk, and readers should perform their own research before making any decisions.