XRP just gave the entire crypto market a reality check, plunging 5.2% in the last 24 hours and wiping out gains faster than a rug-pull. Other big players like Dogecoin (DOGE), Solana (SOL), Ethereum (ETH), and Binance Coin (BNB) followed suit, shedding up to 2%. The overall crypto market tumbled by 3% too.
A stronger U.S. dollar, fueled by renewed investor confidence, is slapping every risk asset in sight. Global markets aren’t having a great time either, with Asian equities spiraling down and U.S. stock futures pointing to more pain ahead. It would seem that the bears are starting to get a bit too comfortable.
Crypto bleeding, markets reeling
Friday was ugly for U.S. equities. Investors bailed out of positions, trimming risk as uncertainty looms large. The Asia-Pacific index, which had been riding a five-day winning streak, flipped and erased its gains. Meanwhile, futures contracts on U.S. indices looked just as miserable on Monday.
Dow Jones futures lost 81 points, down 0.19%, while S&P 500 futures slipped 0.16%. Nasdaq-100? It barely moved, as if it was holding its breath for the carnage ahead.
Here’s the real problem: the U.S. Dollar Index (DXY), which measures the dollar’s strength against major global currencies, has been climbing. Historically, Bitcoin and other cryptocurrencies move in the opposite direction of the dollar.
When the greenback gets stronger, crypto gets weaker. Why? A strong dollar makes traditional assets like U.S. Treasuries and stocks look a lot more tempting to investors. Crypto, by comparison, feels like that risky bet you regret at 3 AM.
This surge in dollar strength comes with President-elect Donald Trump set to take office in January. Love or hate him, the guy seems genuinely into crypto. Though his economic policies are expected to strengthen the dollar more, leaving cryptos to fend for themselves in a hostile environment.
The death of the “Santa Claus Rally” and what the future holds for XRP
The so-called “Santa Claus Rally,” where markets historically rally during the last five trading days of December and the first two of January, is officially dead. Instead, it’s looking more like a “Santa Claus Meltdown.”
This is only the third time in history that U.S. stocks have posted back-to-back losses during the holiday trading period. So much for ending the year on a high note.
XRP, meanwhile, is actually the biggest winner of the Trump-infused rally. It has surged by over 370% since the win on November 5. With Ripple winning its case against the SEC last summer, the token’s credibility got a much-needed boost.
A federal judge ruled that XRP isn’t a security when sold on retail exchanges, though it’s considered an unregistered security when sold to institutions. That ruling was a win for Ripple and XRP holders alike, but not everyone’s convinced that the token has long-term staying power.
Sure, it’s great for cross-border payments, but has that translated into meaningful business use cases? Not really. Even with ETFs for XRP now in the works from firms like Bitwise, WisdomTree, and 21Shares, skeptics aren’t convinced this token has legs.
For all its regulatory wins, XRP still feels like it’s struggling to find its place in the crypto ecosystem.
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