The rather impressive Monday rally didn’t last long, as the entire cryptocurrency market has turned red today, with the market cap losing over $80 billion from top to bottom.

Ripple’s native token is no exception. The asset has dropped from yesterday’s peak at $1.11 to $1.05. Here are some of the possible reasons behind this decline and what could be next.

XRP Dives and ETF Inflows Can’t Save It

Perhaps the most obvious reason behind XRP’s crash is that it’s not an isolated case; the entire market has turned red, led by bitcoin’s dive from $65,600 to $63,000. As such, the cross-border token cannot be simply ruled out, as it tends to follow the overall market trend.

It appears investors are reducing their exposure to risk-on assets like crypto ahead of the next Federal Reserve FOMC meeting. The US central bank will announce its interest rate decision tomorrow evening. According to some reports, there’s an actual chance of a rate hike despite easing inflation in June.

The rejection at $1.11 and the subsequent decline to $1.05 meant that XRP has actually lost a crucial support zone at $1.08-$1.10, which managed to halt its free falls for most of July. Aside from this technical side of things, the asset’s drop triggered a large wave of liquidations, which also created the snowball effect of a more profound decline.

The silver lining is that the ETF net flows remained in the green. However, it was a very modest number of under $600,000, which is evidently not sufficient to help XRP avoid such price losses.

So What’s Next?

The daily leg down hasn’t changed popular analysts’ opinion on XRP’s claimed bright future. Xaif Crypto acknowledged the rising leverage and XRP’s rather tight trading range. The market observer commented that “two-sided liquidations are getting hit on both longs and shorts,” which, aligned with neutral funding and drying up spot liquidity on Binance, will likely lead to a much bigger move soon.

Meanwhile, CasiTrades outlined once again that she expects the next XRP wave to be “violent.” The analyst noted that XRP has returned to macro support, which, if broken to the downside, will likely lead to a more painful decline to $0.87, her targeted bottom.

Source: CryptoPotato