The XRP price retreated for the third consecutive day as the Federal Reserve slashed interest rates. Ripple token dropped to $2.54 on Thursday, down by 5.5% from its highest point this week. It has dropped by over 30% from the year-to-date high of $3.6680.
Why the XRP Price Dropped After Fed Cut
Ripple and other cryptocurrencies plunged after the Federal Reserve delivered its interest rate decision. The bank decided to cut interest rates for the second consecutive time.
Officials said that the cut was necessary because the economy was showing signs of slowing down. Recent data showed that the private sector lost over 36,000 jobs in September.
The main reason why the XRP price dropped after the Fed cut is that officials warned that a December interest rate cut was not guaranteed. In his statement, Powell said:
“A further reduction in the policy rate at the December meeting is not a foregone conclusion — far from it.”
Powell’s statement led to a sharp decline in December interest rate cuts bets on Polymarket. Data shows that this probability has dropped to 69% from this week’s high of 90%.
READ MORE: PayPal Stock Price Rises After Major Dividend and Guidance News
Still, all signs show that the Fed will continue cutting now that the labor market is deteriorating. Top companies like Target, Amazon, and UPS have announced thousands of layoffs this week.
Also, there are signs that the economy is slowing. While the GDP expanded in the second quarter, most of this growth was because of the data center boom. When it is stripped, the data shows that the economy was largely flat, raising the odds for a cut. In an emailed statement to BanklessTimes, Andrew Forson, the head of DeFi Technologies said:
“Overall, a lower-rate environment tends to be constructive for both equities and digital assets, and we view this backdrop as broadly positive for crypto as investors look toward alternative and growth-oriented assets.”
Still, the XRP price has potential catalysts that may lead to a rebound. The most notable ones is that the recently launched XRPR ETF has already crossed the $115 million asset milestone. Also, there is a likelihood that the SEC will give its go-ahead for the filed spot XRP ETFs, which will lead to more demand from American companies.
Ripple Price Technical Analysis
The daily timeframe chart shows that the XRP price has remained under pressure in the past few months. It has plunged from $3.66 in July to $2.55 today.
The coin has dropped in the past three days, erasing some of the gains that happened last week. XRP price has moved below the 50-day and 200-day Exponential Moving Averages (EMA). The two averages are about to cross each other, forming a death cross pattern.
Therefore, the most likely Ripple price forecast is moderately bullish as the Fed fears will fade. A rebound could push it to the next key resistance level at $3.
However, the formation of a death cross will confirm the bearish outlook and point to a drop to the psychological point at $2.
READ MORE: Pepe Coin Price Crash and the $7.1 Billion Wipeout Explained
