XRP Price Drops to $2.07 Amid Volatility, But ETF Momentum Keeps Bulls Interested

XRP XRP/USD is trading 4.43% lower to $2.07 on Wednesday, extending a retracement after last week's rally and tracking broader weakness across the crypto market. 

Despite the dip, the token is up over 15% in the past week, outperforming many of its peers as investors weigh volatility against long-term ETF optimism.

Price Action and Global Pressure Weigh on Crypto

The latest pullback comes amid a drop across digital assets and global equities. Bitcoin is down 2.4% to $83,441, while Ethereum and XRP have fallen 4.7% and 4.5% respectively. Analysts suggest the correction reflects profit-taking following Tuesday's bounce, combined with concerns about tightening liquidity in global markets.

A spike in Japanese bond yields has strengthened the yen and sparked fears that the yen carry trade, "a strategy where investors borrow yen at a lower interest rate to invest in high-yield international assets," B2 Ventures founder Arthur Azizov said to Barron's. "As a result, it may lead to a reduction in global liquidity and affect the crypto market."

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XRP is also seeing a surge in on-chain activity, with exchange inflows passing 55 million XRP as of Wednesday, according to CryptoQuant. That increase signals elevated selling pressure, which contributed to over $5.1 million in long liquidations in the last 24 hours, according to Coinglass.

ETF Speculation Still Supporting Long-Term Sentiment

Despite the short-term drop, analysts continue to cite XRP as a frontrunner in the race for U.S.-listed spot crypto ETFs. A report from Kaiko Research issued Monday highlights XRP's superior market depth and liquidity as key attributes that improve its approval chances compared to rivals like Solana and Litecoin.

XRP currently has the deepest 1% market depth among altcoins on vetted exchanges—a metric that captures the available volume of buy and sell orders near the current price and is important for creating efficient structured products. Kaiko analysts note that the factors have historically played a key role in SEC ETF evaluations.

Last week, Teucrium launched the first leveraged XRP ETF, known as XXRP, providing twice-daily returns through derivatives. While not a spot product, its approval adds pressure on the SEC to respond to Grayscale's pending XRP ETF application by the May 22 deadline.

Legal Resolution Remains a Key Catalyst

Momentum for an ETF approval is also building amid signs of resolution in Ripple's long-running legal battle with the SEC. The two parties have reached an agreement in principle to end the dispute, and are awaiting formal Commission sign-off before seeking a final court ruling.

The agency's incoming Chair, Paul Atkins, is seen as more favorable to crypto than his predecessor and may accelerate reviews of ETF filings under his tenure. However, analysts caution that any leadership transition may also slow near-term decision-making as regulatory priorities are reassessed.

Key Levels to Watch

XRP is currently testing key support at $2.00, with secondary support near the 200-day exponential moving average (EMA) at $1.95 and a deeper floor at $1.64, which marked last week's low. On the upside, $2.24 remains a major resistance zone tied to the 50- and 100-day EMAs, followed by the $2.38 local high.

Technical indicators are mixed. The MACD continues to flash a weak buy signal, while the RSI is approaching oversold territory, potentially signaling another bounce if $2 holds.

XRP is facing pressure from broader macroeconomic uncertainty and increased short-term selling, but long-term bullish catalysts remain intact. The coin's liquidity, rising U.S. market share, and ongoing regulatory clarity set it apart from competitors as the May 22 ETF deadline approaches.

While volatility may continue, XRP's relative strength and strategic positioning suggest it remains one of the top altcoins to watch in the coming weeks.

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