XRP Price Takes a Hit: Why the 16% Drop?

The price of XRP has taken a significant dip, falling 16% in the past 24 hours to trade at approximately $2.32 as of March 4. This sharp decline has raised concerns among traders and investors, especially as the broader cryptocurrency market faces a downturn. Here’s a closer look at the factors driving XRP’s drop and what this means for the coin’s future price movements.

Broader Market Downturn Affects XRP

XRP’s sharp fall mirrors the overall bearish sentiment gripping the entire cryptocurrency market on March 4. In addition to XRP’s losses, major cryptocurrencies like Bitcoin (BTC) and Ether (ETH) have also experienced significant declines. Bitcoin is down 10% to around $83,500, while Ether has shed more than 12%, trading just above the $2,000 mark.

The global crypto market capitalization has dropped by 8% on the day, now sitting at approximately $2.76 trillion. This downturn comes amid broader macroeconomic concerns and a shift in risk sentiment triggered by geopolitical and economic developments.

Trump’s Tariffs Fuel Market Sell-Off

One of the main catalysts for the market-wide sell-off is the recent announcement of new tariffs by U.S. President Donald Trump. Starting on March 4, Trump’s tariffs of 25% on imports from Canada and Mexico—along with a 20% tariff on Chinese imports—have begun to take effect. These tariffs, which were imposed following Trump’s return to the White House, have raised fears of tightening global economic conditions, leading to a reassessment of risk in the markets.

As a result, many investors have scaled back their exposure to risky assets like cryptocurrencies, contributing to the broader correction.

Liquidations in the XRP Derivatives Market

XRP’s price drop is not just a result of market-wide sell-offs; the derivatives market has also seen significant liquidations. Over $58 million worth of XRP futures positions were liquidated in the past 24 hours, with $50 million coming from long positions. This heavy liquidation signals that bullish traders are being forced to sell their positions under pressure, compounding the downward movement in XRP’s price.

The scale of these liquidations is reminiscent of the period between February 24 and 26, when $80 million in long XRP positions were wiped out, coinciding with a 17% price drop. The market’s open interest in XRP has also fallen sharply, down by 25% from $4.45 billion on March 3 to $3.34 billion, signaling a reduction in trader participation.

Technical Analysis: Key Levels to Watch

From a technical perspective, XRP’s price is in a vulnerable position. The cryptocurrency has experienced a major U-turn, erasing the gains it made on March 2. As the price continues to decline, traders are watching key support levels closely.

The immediate focus for XRP bulls is to defend the psychological support level at $2.20. This level aligns with the middle boundary of a descending parallel channel, which has been acting as a key technical reference. If XRP fails to hold above this level, the price could extend its decline toward $1.76, a low reached on February 3, and potentially even $1.55, where the 200-day simple moving average (SMA) currently sits.

On the flip side, the bullish case for XRP requires a recovery above the $2.48 resistance level, where the 100-day SMA and the upper boundary of the channel intersect. A sustained close above this level could signal a breakout from the current bearish trend, paving the way for a potential return to $3.00.

Conclusion: What’s Next for XRP?

XRP’s 16% drop on March 4 is largely in response to a combination of factors, including the broader crypto market’s downturn and the geopolitical uncertainties stemming from President Trump’s new tariffs. Furthermore, the massive liquidations in XRP’s futures market reflect growing bearish sentiment and the market’s reaction to the shifting macroeconomic conditions.

For XRP to avoid further declines, bulls need to hold key support levels, particularly around $2.20. A failure to do so could result in a deeper correction toward the $1.55 level. Conversely, if XRP can break above the $2.48 resistance, there could be a potential recovery to higher levels in the near future.

As always, investors should stay vigilant and watch for any further developments in both the cryptocurrency and global economic landscapes that could impact the market’s direction.