XRP Dips as Inflation Concerns Spark Crypto Volatility

XRP is facing fresh downward pressure as inflationary concerns tied to recent US economic data ripple across the broader cryptocurrency market. The digital asset saw a pullback of nearly 5%, trading around $3.10 during Thursday’s session, approaching key technical support.

Investor sentiment has weakened as the US Producer Price Index (PPI) showed unexpected strength, suggesting rising inflation could delay anticipated Federal Reserve policy shifts. This data has contributed to a wave of volatility across the crypto space, with XRP navigating a critical juncture near the $3.00 level.

US Economic Report Rattles Crypto Trading

The Bureau of Labor Statistics released July’s PPI figures, which indicated a 0.9% jump month-over-month and a 3.3% gain year-over-year. These numbers far exceeded analyst expectations of a 0.2% and 2.5% rise, respectively. Excluding food and energy, core PPI also climbed 0.9% monthly, fueling an annual increase to 3.7%, the highest since March.

This surprising surge in producer costs is seen as a warning that consumer prices might also climb in the coming months. Inflation pressures remain a key concern for investors in crypto and other risk assets, especially with fears that the data may hinder the likelihood of rate cuts by the Federal Reserve in the near future.

The reaction has been swift. Bitcoin saw a pullback after briefly hitting a new peak at $124,474, while Ethereum gave up some gains, dipping toward $4,500 before modestly recovering.

Spike in Liquidations Adds Fuel to Decline

XRP’s bearish tone is being amplified by a sharp uptick in liquidations across derivatives markets. Data shows that approximately $62 million in XRP positions have been cleared in the past 24 hours, with a stark imbalance favoring long liquidations—$57 million versus just $5 million in shorts.

This forced selling intensifies downward movement but may also precede a potential short squeeze. If XRP maintains support at the $3.00 level, short sellers who previously drove the market lower may need to buy back in, bolstering prices temporarily and fueling a relief rally.

XRP Technical Setup: Is Recovery Possible?

The current price action reflects caution among traders. XRP remains above its immediate support level of $3.00, but key indicators suggest limited demand and weakening upward momentum. The Relative Strength Index (RSI) is trending downward toward the middle of its range, signaling reduced buying interest.

If RSI continues its drop below the midpoint, the downward momentum could increase, positioning XRP to retest the 50-day Exponential Moving Average (EMA) around $2.92.

The Moving Average Convergence Divergence (MACD) also underscores this bearish sentiment. Since July 24, a consistent sell signal has been in place, with the MACD line remaining below the signal line and red histogram bars forming beneath the zero mark.

However, the medium-term outlook remains constructive. Despite near-term weakness, XRP’s 50-day, 100-day, and 200-day EMAs—currently at $2.92, $2.69, and $2.42 respectively—continue to slope upward. These levels could act as strong support zones if the price declines further, keeping the broader uptrend intact if they hold.

From a resistance perspective, traders will be closely watching the $3.40 region, which marked the most recent top, along with the long-term high of $3.66 witnessed in mid-July.

Market Awaits Clear Direction Amid Macro Uncertainty

XRP’s recent dip reflects the broader tension in crypto markets driven by macroeconomic forces. As inflation concerns rise and uncertainty looms over Federal Reserve policy shifts, investors remain cautious. The drop in XRP is not isolated but part of a broader retracement impacting major tokens.

Related: XRP Price: $12M Max Pain for Bears

Whether XRP can sustain its critical support and rebound will depend heavily on upcoming inflation data, investor risk appetite, and market reaction to potential Fed decisions. For now, XRP remains on shaky ground, with $3.00 as a pivotal level that could shape near-term price direction.