XRP and Bitcoin See Declines as Fears Mount that the Monetary Easing Cycle May Not Proceed at the Anticipated Pace This Year

Cryptocurrencies like XRP, Bitcoin dropped on Monday over worsening fears that the cycle of monetary easing may not unfold as anticipated this year.

Bitcoin, the world’s largest digital currency, decreased by 3.5% in the last 24 hours, trading at around $91,881, as reported by Barrons.

XRP, a prominent cryptocurrency used for transactions on Ripple’s payment platform, fell by 3.4% to $2.44. The drop comes after XRP experienced a surge over the weekend, reaching $2.60, which was partly attributed to anticipated developments involving the Securities and Exchange Commission (SEC).

The SEC has been engaged in a legal battle with Ripple since 2020, accusing the company of selling XRP as an unregistered security. In August 2024, the court ordered Ripple to pay a $125 million fine, substantially less than the $2 billion initially sought by the regulator. The SEC appealed the decision in October, and a deadline of January 15 was set for the regulator to present arguments supporting its appeal.

A stronger-than-expected U.S. jobs report further contributed to the recent downturn in cryptocurrency prices, heightening investor concerns that the Federal Reserve may maintain elevated interest rates for an extended period.

Bank of America analysts noted that the “cutting cycle is over,” reflecting a more cautious outlook following the December jobs figures.

The upcoming Federal Open Market Committee (FOMC) meeting, scheduled for January 28-29, is expected to see the central bank hold interest rates steady, with the CME FedWatch tool indicating a roughly 33% chance of no rate cuts this year.

On the other hand, Goldman Sachs adjusted its forecast on Saturday, now anticipating two rate cuts in 2025 and one in 2026, down from three cuts previously expected.

While cryptocurrency investors have reacted favorably to president-elect Donald Trump’s pro-crypto stance, there are concerns that potential tariffs could drive up prices and make it harder for the Fed to cut interest rates quickly.

However, Goldman Sachs analysts, led by Jan Hatzius, believe that the implications of the new administration’s policies for interest rates may not be as decisively hawkish as some assume.

Among other cryptocurrencies, Ether saw a significant drop of 7.8% in the past 24 hours, while Solana and Dogecoin fell by 8% and 5.3%, respectively.