XRP price wobbles amid heightened volatility and rising US inflation
- XRP bulls rush to defend support at $2.80 after a volatility spike in the broader cryptocurrency market on Tuesday.
- US CPI data shows that inflation rose 2.7% in June, reflecting the impact of higher tariffs amid economic uncertainty.
- US 'Crypto Week' is ongoing, with the House expected to vote on various cryptocurrency regulations, including the GENIUS Act.
Ripple (XRP) shows signs of extending the correction below support tested at $2.80 Tuesday. The decline, which has seen XRP drop to $2.87 at the time of writing follows the previous day's rally to $3.03, reflecting the soaring volatility in the broader cryptocurrency market.
Most crypto assets in the top 100 by market capitalization followed in Bitcoin's (BTC) footsteps, edging higher amid rising investor appetite. Bitcoin reached a new all-time high above $123,000 before experiencing a sharp correction, signaling heightened profit-taking as investors booked profits.
Market overview: XRP uptrend stalls as US inflation rises
Investors turned their attention to the release of the United States (US) Consumer Price Index (CPI) data on Tuesday, which created instability across the crypto market. According to the US Bureau of Labor Statistics (LBS), the annual inflation rate rose 2.7% in June, an increase from 2.4% in May, while matching market expectations.
The core Consumer Price Index, which excludes the volatile prices of food and energy, rose 2.9% in June, up from 2.8% the previous month. On a month-over-month basis, the headline CPI and core CPI increased 0.3% and 0.2%, respectively.
Cryptocurrency prices remained relatively stable following the release of the US CPI data, indicating that the volatility shock had been factored into the market. XRP shows signs of resuming its uptrend after rebounding from the support level at $2.80.
US 'Crypto Week' could boost interest in XRP
The US House of Representatives announced the 'Crypto Week' on July 3, which kicked off on Monday, during which lawmakers will consider various cryptocurrency-related bills, including "the CLARITY Act, the Anti-CBDC Surveillance State Act, and the Senate's GENIUS Act."
The House Committee on Financial Services Chairman French Hill said that this would be a monumental week as the US takes steps toward becoming the "crypto capital of the world." The landmark legislation aims to establish a clear regulatory framework for digital assets that protects the interests of consumers and investors while also fostering guidelines for the issuance of stablecoins. As part of the House mandate, lawmakers will also permanently block the establishment of a Central Bank Digital Currency (CBDC), ensuring that the financial privacy of the American people is safeguarded.
"Passing stablecoin and market structure legislation, alongside a CBDC ban, will ensure the US wins the Web3 race," House Representative Bryan Steil said.
Ripple is among the companies that could immediately benefit from the passing of the three bills, particularly with the GENIUS Act and the CLARITY Act. RLUSD is Ripple's regulated US Dollar (USD) backed stablecoin. At the same time, with clear regulations, Ripple could advance its Ripple Payments platform, increasing adoption and demand for XRP.
Technical outlook: XRP bulls fight to resume the uptrend
XRP price faced increasing selling pressure during the early American session amid the risk of extending the decline toward the 50-day Exponential Moving Average (EMA), which is currently at $2.34 at the time of writing.
The Relative Strength Index (RSI) is currently moving downward, at 77 on the daily chart, signaling bearish momentum. Traders could reduce exposure if the RSI slips into neutral territory, potentially accelerating the trend reversal.
If volatility persists due to the perceived risk of rising inflation in the US, investors may focus on de-risking, thereby maintaining the path of least resistance downward. Other key areas that could serve as support include May's peak at $2.65 and $2.47, which capped price action in late March.
XRP/USDT daily chart
Still, the Moving Average Convergence Divergence (MACD) indicator, which has maintained a buy signal since June 28, suggests that XRP has the potential to resume its uptrend. However, this would depend on the investor's risk appetite and the market dynamics surrounding the implementation of higher tariffs on imports into the US on August 1.
Open Interest, funding rate FAQs
Higher Open Interest is associated with higher liquidity and new capital inflow to the market. This is considered the equivalent of increase in efficiency and the ongoing trend continues. When Open Interest decreases, it is considered a sign of liquidation in the market, investors are leaving and the overall demand for an asset is on a decline, fueling a bearish sentiment among investors.
Funding fees bridge the difference between spot prices and prices of futures contracts of an asset by increasing liquidation risks faced by traders. A consistently high and positive funding rate implies there is a bullish sentiment among market participants and there is an expectation of a price hike. A consistently negative funding rate for an asset implies a bearish sentiment, indicating that traders expect the cryptocurrency’s price to fall and a bearish trend reversal is likely to occur.
Author
John Isige
FXStreet
John Isige is a seasoned cryptocurrency journalist and markets analyst committed to delivering high-quality, actionable insights tailored to traders, investors, and crypto enthusiasts. He enjoys deep dives into emerging Web3 tren
