Why XRP Collapsed $20 Billion in 7 Days

Though it is undeniable XRP had an excellent run in November, and that it, despite the turbulence, retains much of the recent gains, it is equally clear

XRP had an excellent run in November, and it retains much of the recent gains, despite the turbulence. However, last week, the token fell upon tough times.

Specifically, after rallying 468% between election day and its recent peaks on December 3, XRP collapsed 19% by press time, reaching its December 24 price of $2.30.

In the last seven days, the cryptocurrency market dynamics ensured the token diminished by about $20 billion as its market capitalization plunged from $152 billion to $132 billion.

The popular token’s downturn arguably can’t be pinned on the XRP community or any other event tied directly to the specific cryptocurrency. Instead, it is part of a greater bloodbath that heavily impacted digital – and, to an extent, many other – assets since the conclusion of the latest Federal Open Market Committee (FOMC) meeting.

Why XRP collapsed $20 billion in 7 days

The Fed announced the expected 25 basis points (BPS) interest rate cut, but the remaining announcements raised the expected 2025 inflation from 2.1% to 2.5%, and the indices that there would be fewer rate reductions in the coming 12 months were received poorly.

The immediate – though somewhat tempered by press time – $1.5 trillion stock market wipe and XRP’s $7 billion 24-hour bloodbath, reported by Finbold on December 19, demonstrate investor’s fear ignited with the inflationary warnings.

Still, it is worth pointing out that the Federal Reserve can’t be blamed for all of the token’s recent struggles. Indeed, despite the $25 billion drop in the last seven days being, in many ways, shocking, XRP began stagnating several weeks earlier.

Much like the bulk of the cryptocurrency market, the upward momentum appeared largely exhausted for the token by early December with trading remaining sideways since.

Can 2025 renew the XRP rally?

Finally, the relatively protracted stagnation and the more recent downturn do not guarantee that XRP can’t rebound into the New Year. The ‘Santa Claus rally’ could still reignite the buying activity in 2024, and even if the prices remain relatively depressed by 2025, January is set to provide several external tailwinds.

Two of the biggest anticipated developments come in the form of Donald Trump assuming the presidency – the incoming Republican administration is widely expected to be unprecedently crypto-friendly – and, on January 20, Gary Gensler is scheduled to step down as the Securities and Exchange Commission (SEC) chair.

The controversial Chair’s departure is also expected to provide an opening for a swift and favorable resolution to Ripple Labs’ long legal battle with the watchdog.