XRP Tied Down Despite Regulatory Reform Tailwinds... $3 Reclaim or $1 Collapse by Year-End?

▲ XRP (XRP)/AI Generated Image ©

Major cryptocurrency XRP (Ripple), which saw an unstoppable surge, breaking the $3 mark alongside a boom in the virtual asset market immediately after the US presidential election, has faced severe sluggishness this year, causing anxiety among investors. With XRP recently ceding even the $1.50 support level and facing downward pressure, market attention is focused on whether its year-end price will be a glorious revival to $3 or a plunge below $1.

According to investment media The Motley Fool on May 21 (local time), despite the long-awaited regulatory reform movement in the virtual asset sector becoming visible, macroeconomic barriers are holding XRP back. The Clarity Act, a US cryptocurrency market structure bill recently passed by the US Senate Banking Committee and gaining legislative momentum, is expected to be a historic milestone for the entire virtual asset industry by providing a clear regulatory framework. However, experts dismissed that despite the emergence of such a massive institutional tailwind, the true key variable determining the fate of virtual assets will ultimately be the 'direction of the benchmark interest rate'.

In particular, market uncertainty is at its peak regarding the monetary policy direction of Kevin Warsh, the new Fed Chairman who succeeded Jerome Powell as head of the Federal Reserve (Fed). If interest rates are cut as pressured by political circles, led by the President, speculative funds would flow back into the market, reviving investor sentiment. However, with inflation recently rearing its head again, the possibility of further interest rate hikes is emerging. The diagnosis is that if the Fed actually pulls out the interest rate hike card, a rapid and unbearable level of capital outflow and price collapse could occur across the entire risky asset market, including XRP.

The media diagnosed XRP's current situation, which has already fallen by about 26% this year alone, and analyzed that even if the positive news of the Clarity Act's final passage through Congress materializes, it would be insufficient to completely offset macroeconomic headwinds. This is because geopolitical risks and concerns about a global economic slowdown are protracted, intensifying investors' aversion to risky assets. Therefore, unless a decisive demand catalyst emerges within the year to reverse the market sentiment, the probability of XRP continuing its decline and falling below the $1 mark by year-end is structurally higher than the probability of it recreating its past glory and soaring to the $3 mark.

Consequently, the short-term future of XRP, currently engaged in a tough battle around $1.37, is summarized by extreme volatility. Holders who entered believing in a long-term vision should thoroughly prepare for the intense price fluctuations to come, while prospective investors who have not yet entered may find it a safe choice to protect their assets by maintaining a wait-and-see attitude until the uncertain macroeconomic trend finds its direction.

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