Why is XRP Going Down? An Analysis of Market Logic Under Five Pressures
By the end of May 2025, XRP price Hovering in the range of $2.07 - $2.13, it has fallen over 5% in the past week, retreating nearly 30% from the year’s high of $3.40. This downward trend not only reflects short-term selling pressure but also reveals a deeper shift in market structure.
Regulatory Process Delay: ETF Postponement Impacting Confidence
The U.S. Securities and Exchange Commission (SEC) has postponed its decision on Franklin Templeton. XRP The resolution for the spot ETF application has set a new deadline of June 17, 2025. Although the market predicts a 77% probability of approval within the year (according to Polymarket data), the delay has hindered institutional capital entry, leading to a short-term liquidity expectation falling through.
On-chain activity has plummeted: a warning signal of shrinking demand.
The number of daily active addresses on the XRP Ledger plummeted from a peak of 108,000 on December 10, 2024, to 21,000, a decline of over 80%. On-chain transaction volume and liquidity have contracted simultaneously, and the decline in network activity directly reflects weakened demand, undermining the price support foundation.
Macroeconomic pressures and market sentiment shift
- Risk aversion dominates: On the eve of the Federal Reserve FOMC meeting, concerns about tightening monetary policy have led to a general pullback in the cryptocurrency market, with XRP coming under pressure along with the broader market.
- Declining social activity: Santiment data shows that in the past three months, the discussion share of XRP in the cryptocurrency community has continued to decline, with market attention being diverted to competitors such as BTC and SOL.
Intra-ecosystem competition: The “double-edged sword” effect of the stablecoin RLUSD
The USD stablecoin RLUSD launched by Ripple is intended to complement the ecosystem, but it has raised questions among investors about the functional positioning of XRP. Some opinions suggest that RLUSD could replace XRP as the preferred bridge asset for cross-border payments, which may impair its long-term value logic.
The technical analysis has issued a bearish signal.
- Indicators weaken: The Relative Strength Index (RSI) reports at 46.56, falling below the neutral zone, with bearish momentum increasing.
- Key levels under pressure: The Bollinger Bands indicate that the price is below the middle band ($2.17). If it continues to lose the support level at $2.05, it may trigger a deeper pullback.
- Sell signal confirmation: The TD sequential indicator has released a sell signal on the 3-day chart, suggesting a continuation of the downward trend.
Future Outlook: Potential Turning Points and Risk Balance
Despite short-term pressure, on-chain data shows that long-term holders are accumulating at lower prices, with a 15% increase in new wallet addresses in May and a 25% surge in derivative open interest, reflecting some capital’s optimistic outlook for the future. Institutions such as Standard Chartered maintain a mid-term target of $5.50, while Bitwise predicts a year-end target of $4.48.
If the technical indicators break through the resistance level of 2.29 USD, there is a possibility of restarting the upward momentum; conversely, if the support at 2.05 USD is lost, it may drop to 1.90 USD. Investors need to closely monitor the June ETF decision, the recovery of on-chain activity, and the progress of Ripple ecosystem integration, as these factors will be key variables for price reversal.
