Why did crypto crash today? Ripple’s (XRP) price dropped by 18% in just 36 hours. This sudden decline has left investors and analysts confused. The crypto market is always volatile, but today’s crash has raised many questions.
The cryptocurrency market is known for its volatility, often experiencing sudden fluctuations in price that can leave traders and investors scratching their heads. Recently the market saw a sharp decline, with Ripple’s (XRP) price dropping 18% in just 36 hours. This has many people asking: Why did crypto crash today? Is it just a market correction, or is there more behind XRP’s sudden drop?
XRP Hits Multi-Week High Before Sudden Crash
Ripple (XRP) had been doing well until yesterday afternoon. It was seen as one of the top performers among big altcoins. However, the market mood changed quickly. This caused XRP’s price to drop by 18% in just 36 hours.
To understand why crypto crashed today, especially XRP, we need to look at what happened before. XRP had been going up as a big event approached. Earlier this week, its price was about $2.35. Things got more exciting when Ripple announced its stablecoin, RLUSD, would be launched on December 17.
The announcement caused XRP’s price to rise, as traders and investors expected a positive market impact. By Monday evening, XRP’s price jumped to nearly $2.6. The momentum continued on launch day, and on December 17, XRP reached a multi-week high of $2.73.
The “Sell-the-News” Phenomenon: Why did crypto crash today?
XRP’s price increase seemed to be part of the excitement around Ripple’s RLUSD launch. However, after the stablecoin started trading, XRP’s price began to fall, and the gains quickly reversed. The question arose: Why did crypto crash today? Was it just the result of a market-wide downturn, or did something else drive XRP’s sharp decline?
This sudden reversal can be attributed to the “sell-the-news” phenomenon, which is common in financial markets. In this case, XRP’s price surged ahead of the news of RLUSD’s launch. After the stablecoin started operating, the initial excitement among investors diminished as many investors started taking their money back. Such moves caused the price of XRP to be plummeted in no time.
Broader Market Factors and the Fed’s Impact: Why did crypto crash today?
The “sell-the-news” theory may explain part of XRP’s crash. But the overall crypto market also had an impact. The Fed’s recent rate cut affected the entire market, causing prices to drop across the board. XRP’s price decline was sharper than most, though, which suggests that there may be more at play than just the market-wide correction.
As the crypto market reacts to external economic pressures, assets like XRP are often more volatile, and Ripple’s recent price movements are no exception…
Potential XRP ETF Delays: Why did crypto crash today?
XRP is also struggling due to uncertainty about a potential XRP Exchange-Traded Fund (ETF) in the U.S. Bloomberg’s Eric Balchunas said Ripple might be behind projects like Litecoin and Hedera in getting ETF approval. This delay could be made worse by Ripple’s ongoing legal fight with the U.S. Securities and Exchange Commission (SEC), which has raised questions about the token’s regulatory status.
Why did crypto crash today? There may be a leadership change in the SEC in the coming months. However, experts are unsure about XRP getting ETF approval soon. This uncertainty could be another reason for the token’s recent decline.
So now the question arises, why did the price of crypto today take a knock? Well, it can be said that the market is always volatile, the recent price drop however does seem to have been caused by several events. So why did XRP rise before the launch of Ripple’s RLUSD stablecoin, but dropped swiftly, following the common ‘sell-the-news’ trend, afterwards? The broader crypto market was also affected by the Federal Reserve’s rate cuts. Plus, uncertainty about an XRP Exchange-Traded Fund (ETF) approval put more pressure on the price. Legal issues with the SEC added to the confusion, making XRP’s future unclear.
Also Read: Ethena Labs Partners with World Liberty Financial to Launch sUSDe on Aave: A New Era in DeFi
