How XRP Price Crash Was Foretold by Funding Rate But ETF-led Institutional Adoption Will Melt Faces

The XRP price took one of the biggest tumbles among top altcoins yesterday, falling to as low as $2.16. However, it has recovered somewhat, trading at $2.34, down 13.65% in the past 24 hours.

Talk of crypto beginning to decouple from stocks has proved premature but sentiment is still strongly bullish for Ripple’s XRP token.

Crypto succumbed to selling pressure yesterday after chair Jerome Powell indicated that the Fed was minded to slow down on rate cuts and would need to see more progress on inflation.

Still, stocks are in the green at the time of writing, so there's a fair chance crypto will make up more lost ground.

The drawdown came as a rude awakening for high-flying stocks, especially the Magnificant Seven tech stocks, with Tesla, for instance, down 10% yesterday.

An attempt to make a concerted recovery from what is a mild correction by crypto standards began to falter at the beginning of the US session, with bitcoin holding on above $100k.

Funding rates in BTC and XRP in decline since December 8th

Those who have been watching the BTC and XRP funding rates in the perpetual futures market could be forgiven for saying I told you so.

As can be seen in the Glassnode chart below, funding rates for both XRP and bitcoin have been falling since Sunday, December 8. Although still in positive territory, a declining funding rate means weakening near-term confidence in long positions.

Traders going long who didn't heed the warning by taking countervailing measures to hedge their positions, fell victim to what, in hindsight, we can see as inevitable liquidations.

Liquidations across crypto were in the region of $804 million, according to Coinglass data. Most of the damage was in BTC and ETH, but XRP, erstwhile third-placed crypto by market cap (it has now slipped back below Tether into fourth place), suffered liquidations of $40 million.

As we would expect, most of the $40 million in liquidations were longs. According to Coinalyze there were $27 million longs vs $9.2 million shorts.

XRP price predictions – $3, $7, $10, $100 in 2025?

Despite the Fed-induced correction, most market watchers expect the XRP price to bounce back and haven’t given up on end-of-year predictions approaching $3.

Bulls are encouraged not just by the prospect of a pro-crypto administration in 2025, but also by the adoption progress of Ripple, the issuer of XRP.

This week's launch of RLUSD, the Ripple stablecoin that runs on the same XRP Ledger blockchain as XRP and uses the liquidity token as a bridging currency, was a positive development.

Expectations around the stablecoin before and after its approval by the New York Department of Financial Services (NYDFS) on December 10, helped push the XRP price up to $2.71 earlier this month.

The stablecoin market is growing, but trust, compliance, and utility are critical. Market News and Data brought to you by Benzinga APIs

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