Ripple (XRP) Put to the Test Ahead of Fed Rate Decision, Will It Hold the 200-Day Moving Average?

▲ Ripple (XRP), Dollar (USD) ©

As hotter-than-expected inflation data in the US stimulated fears of additional interest rate hikes by the Federal Reserve (Fed), XRP (Ripple) experienced a sharp decline, testing the support of its 200-day moving average. With macro-economic risk aversion sentiment hitting the overall cryptocurrency market, coupled with bearish bets in the derivatives market, downward pressure was further amplified.

According to CoinMarketCap, a cryptocurrency market data aggregator, on September 11 (local time), XRP fell by 3.70% over the past 24 hours, dropping to the $1.34 level. This is a direct result of its exposure to a macro environment extremely sensitive to interest rates, with a correlation coefficient of 0.92 with the S&P 500 index. During the same period, over $562 million in large-scale forced liquidations occurred across the entire cryptocurrency market, including a 1.9% drop in Bitcoin (BTC), and XRP, which has a high sensitivity (beta) to market sentiment, also retreated, recording a decline greater than the market average.

The key trigger for this sharp decline was the surprise rebound in the US August Producer Price Index (PPI). The PPI, which rose by 5.4% year-on-year, exceeded market expectations and reached its highest level in two months. As the slowdown in inflation faltered, fears resurfaced that the Federal Reserve might raise the benchmark interest rate at the upcoming Federal Open Market Committee (FOMC) meeting scheduled for September 16, which served as a decisive catalyst, triggering risk-off sentiment across the entire cryptocurrency market.

Bearish positioning in the futures market also fueled the sell-off. According to on-chain and derivatives data, even before the decline intensified, the long-to-short ratio in the futures market had fallen to 0.83, indicating a dominance of short (sell) positions. Furthermore, bearish bets in the futures market deepened as funding rates also turned negative, leading to cascading forced liquidations of leveraged long (buy) positions during the price decline, which accelerated the drop.

From a technical perspective, XRP is currently engaged in a fierce battle at the critical support level of its 200-day Exponential Moving Average (EMA), located around $1.34. While the price structure has not completely collapsed, the short-term trend shows a clear bearish momentum. Experts anticipate a retest of resistance levels in the $1.42 to $1.45 range if the $1.34 support level is fully maintained on a daily closing basis. However, if this line breaks, a further decline to the next support level around $1.26 is deemed inevitable.

The market outlook remains cautiously bearish in the short term. As this decline is a result of a combination of the macroeconomic environment and bearish supply and demand in the futures market, rather than individual negative news, the future direction will depend entirely on the Consumer Price Index (CPI) to be released on September 11 and the Fed's interest rate decision on September 16. Market experts view a positive shift in funding rates and the long-to-short ratio recovering above 1 as key signals for a rebound in investor sentiment.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*