The price of XRP (XRP) has erased all the gains made over the past two weeks. The decline is due to several factors, including the delay in the Ripple vs. SEC lawsuit and reduced expectations of a September rate cut.
SEC postpones closed-door meeting
A closed-door meeting between U.S. Securities and Exchange Commission (SEC) commissioners on August 1st caught the attention of cryptocurrency traders, with many speculating that the commissioners would discuss Ripple and solutions during the meeting.
But the meeting was unexpectedly canceled, with Ripple and the SEC remaining silent and not providing a specific explanation for the delay, leaving the crypto community on edge.
The XRP price has fallen by up to 10.75% since August 1st, and today it is down by 6.75%.
September rate cut likely to decrease
Today’s XRP losses come as the broader cryptocurrency market is down as the likelihood of a rate cut in September diminishes.
As of August 2, the target probability of a 25 basis point (bp) rate cut in September was 71.50%, down from 88.2% a week ago, according to CME data.
Rate cut bets have declined since Federal Reserve Chairman Jerome Powell said in his July 31 press conference that a dovish decision would largely depend on whether inflation is easing.
Powell:
“The question is whether the totality of the data, the changing outlook and the balance of risks are consistent with rising inflation confidence and a robust labor market. If that test is met, a rate cut could be discussed at the next meeting in September.”
Following Powell’s press conference, the price of XRP fell by up to 15.35%, showing that most cryptocurrency traders are locking in profits despite the uncertainty of a rate cut.
Ripple’s 1 Billion XRP Unlock Fears
Ripple has moved over 1 billion XRP from escrow as part of a scheduled release of funds in the past 24 hours. Whale Alert has captured a series of snapshots from Ripple’s escrow wallets showing these massive transfers.
As of August 2, 500 million XRP has been withdrawn from escrow in two waves. This ultimately increases the supply in the market. If demand does not increase to match this inflow, this could put downward pressure on the price.
However, Ripple may re-lock a significant portion of the newly released XRP, similar to what it did after the June 1st unlock. It is worth noting that the company sold around 300 million XRP, but re-locked 800 million XRP, which is worth $182 million.
XRP Price Technical: Bearish Divergence Sell
Today’s XRP decline is part of a broader correction that preceded a bearish divergence signal on the daily chart.
In particular, a bearish divergence is identified when the price makes a higher high but the momentum indicator, the Relative Strength Index (RSI), makes a lower high. In other words, the price rise does not have enough upward momentum to continue any longer, which usually leads to a correction.
Related: XRP Deja Vu: Is Another 60,000% Price Surge Coming?
XRP entered a similar correction cycle after peaking at a local high of around $0.658 on July 31, which coincided with the formation of a lower high on the RSI at 65.48. The increase in daily volume during the correction further shows that traders are confident in the downtrend.
As of August 2, the XRP price is testing the 0.5 Fibonacci retracement level as a support level around $0.571 and is looking to bounce towards the next consecutive Fibonacci level around $0.607.
Conversely, a break below the $0.571 support could test the 50-day (red wave) and 200-day (blue wave) exponential moving averages (EMAs) as support, which are hovering around the same level of $0.54, which is more in line with the 0.382 Fibonacci level.
This article does not contain any investment advice or recommendations. All investment and trading moves involve risk, and readers should conduct their own research when making decisions.