Why Is XRP Dropping? 5 Key Factors and Future Outlook

In May 2025, XRP continued to face bearish pressure, with the price dropping to a two-week low of $2.07, a weekly fall of over 5%. As of early June, XRP price Hovering around $2.18, down 34% from this year’s high of $3.31 in January. There are multiple factors behind this fall, and this article will delve into its root causes and outlook for the future.

Core catalyst weakened: Policy expectations fell short.

the end of 2024 XRP It experienced a explosive increase, rising over 250% since November, and reaching a peak of 3.84 USD in January 2025. This round of market movement is mainly driven by two major expectations:

• Trump’s pro-cryptocurrency policy: The market expects the new government to establish a cryptocurrency reserve and include XRP in it.
• ETF and SEC lawsuit resolution: Institutions predict that spot ETF could bring in over $8 billion in capital inflow.

However, the reality is that the Trump administration only manages existing crypto assets (such as seized assets) and has not significantly increased its holdings of XRP as expected. The delay in policy implementation, coupled with trade tariffs, has raised concerns about an economic recession (the probability has risen to 51%), and market sentiment has rapidly deteriorated.

On-chain activity and market confidence both fall.

On-chain data shows that the daily active addresses of the XRP Ledger fell from 108,000 in December 2024 to 21,000, a drop of over 80%. This directly reflects the shrinking demand:

• User participation decreases → Trading volume falls → Liquidity decreases;
• The popularity of social discussions has lagged behind other mainstream cryptocurrencies for three consecutive months.

At the same time, the SEC has postponed the approval of Franklin Templeton’s XRP spot ETF until June 17. Although the market still expects a 77% probability of approval within the year, short-term uncertainty has weakened institutional confidence in entering the market.

Intra-ecosystem competition: The “double-edged sword” effect of RLUSD stablecoin

Ripple is set to launch the US dollar stablecoin RLUSD in 2025, aimed at optimizing cross-border payments. Despite the favorable long-term layout for ecosystem expansion, it raises questions among investors about the marginalization of XRP’s role:

• RLUSD as a bridge currency may replace some functions of XRP;
• The market is concerned that Ripple’s resource allocation will undermine XRP’s core position.

This internal competition has shaken the confidence of some holders and intensified the selling pressure.

Whale manipulation combined with macro pressures

Although on-chain records show that “whales” (addresses holding 1 million - 10 million XRP) have accumulated 1.4 billion tokens (approximately 3.8 billion USD) since November 2024, the high concentration of holdings poses risks:

• The top 100 addresses control over 70% of the circulating supply, and a single large sell-off can trigger severe fluctuations.
• Expectations of interest rate hikes by the Federal Reserve, upgrades in tariff policies, and other macro risks have prompted traders to turn to safe-haven assets like gold, further draining funds from the cryptocurrency market.

Technical breakdown: Key indicators issue bearish signals

From a technical analysis perspective, multiple indicators confirm the downtrend:

• RSI falls to 46.56, below the neutral 50 level, indicating that bears are dominant;
• The Bollinger Bands indicate that the price has fallen below the middle line of 2.17 USD. If it continues to stay below the support level of 2.05 USD, it may trigger a deeper correction.
• The TD sequence on the 3-day chart has generated a sell signal, indicating further retracement.

Future Outlook: Potential Turning Points and Risk Warnings

Despite being under pressure in the short term, there are still structural opportunities for XRP:

Positive factors

• ETF approved (key window on June 17): If passed, it may replicate the influx effect of Bitcoin ETF funds, driving prices to impact the $5 - $7 range;
• RippleNet ecosystem expansion: Daily transaction volume nearly 1 million, RLUSD and cross-border payments (such as collaboration with the Bank of Indonesia) enhance practicality;
• Lawsuit concluded: The SEC lawsuit was dismissed in March 2025, clearing away the long-standing regulatory gloom.

Risk Warning

• Whales concentrating their sell-off may lead to a flash crash;
• If the ETF is delayed or rejected again in June, the price may fall to the support zone of 1.50 - 2.00 USD.
• Historical cycles show that XRP often enters a long correction after a surge (such as a 90% fall after the 2018 peak).

Conclusion

The current fall of XRP is the result of regulatory delays, internal ecological conflicts, macro pressures, and technical breakdown resonance. The ETF approval in mid-June will become a key turning point; if approved, it may initiate a new round of institution-driven market trends; if delayed again, we need to be cautious of deep correction risks. In the long run, Ripple’s technological accumulation and compliance advantages in the cross-border payment field remain the core bargaining chips for its value reassessment.

The market is like the tides; only during the ebb tide can true value be seen. The test for XRP is in June, while the opportunity arises when the tide returns.