XRP’s Rally Loses Steam: The Key Reasons Behind Its Sudden Price Drop

XRP’s bullish momentum has taken a sudden hit, leaving investors questioning whether its recent rally was sustainable. The cryptocurrency, backed by Ripple, initially surged following a game-changing announcement from former U.S. President Donald Trump. However, in a dramatic turn, XRP has erased a significant portion of its gains, sparking concerns across the market.

XRP’s Rapid Surge and Sudden Drop

Trump’s revelation that XRP, along with Bitcoin (BTC), Ethereum (ETH), Solana (SOL), and Cardano (ADA), would be included in a U.S. strategic crypto reserve triggered a wave of optimism. Following the announcement, XRP skyrocketed nearly 30%, reaching an intraday peak of $2.95—its highest level in years.

However, the euphoria was short-lived. XRP quickly reversed course, dropping over 10% within hours. As of writing, the cryptocurrency is trading at $2.38, marking a 10.02% decline in the past 24 hours. This steep drop has left investors wondering: What went wrong?

Whale Sell-Offs Spark Price Correction

A major reason behind XRP’s abrupt decline is increased whale activity. According to crypto analyst Miles Deutscher, large holders began offloading substantial amounts of XRP immediately after the price spike.

On-chain data confirms that over $120 million worth of XRP was liquidated in the past 24 hours, signaling a clear distribution phase. This means that whales—investors with large holdings—are cashing out after XRP’s 500% surge since November 2024.

XRP’s parabolic rally over the past few months was fueled by several key developments:

• Trump’s election victory in late 2024.
• The resignation of former SEC Chairman Gary Gensler, renewed hope for a more favorable regulatory environment for XRP.
• Hopes of a national crypto reserve, with XRP listed among the selected assets.

Now, with uncertainty creeping back into the market, many large investors are choosing to lock in profits, triggering downward pressure on the price.

Concerns Over XRP’s Inclusion in the U.S. Crypto Reserve

While the idea of a U.S. crypto reserve initially sparked excitement, political and regulatory concerns have begun to cast doubt on its feasibility.

Several policymakers have questioned the wisdom of allocating taxpayer money toward volatile digital assets. Some Bitcoin maximalists argue that only BTC should be included in the reserve, criticizing the decision to add altcoins like XRP. Others believe the plan lacks clarity, particularly on how funds would be acquired and managed, and whether Congressional approval would be required.

These growing uncertainties have dampened investor enthusiasm. Without clear confirmation that the reserve will move forward, speculative hype around XRP has begun to fade, contributing to the recent price correction.

What’s Next for XRP?

Despite the sell-offs and skepticism, XRP remains a dominant force in the crypto industry. Its inclusion in discussions about a government-backed crypto reserve underscores its relevance, particularly in cross-border payments and blockchain finance.

For now, XRP investors are closely watching:

• Further political developments regarding the crypto reserve.
• Regulatory clarity in the U.S. and potential easing of restrictions on crypto investments.
• Market sentiment shifts as whales continue to adjust their positions.

While XRP’s price is currently facing turbulence, its long-term trajectory will depend on how these key factors unfold. Will bulls regain control, or is there more downside ahead? The coming weeks will be crucial.