XRP Falls 6% Amid Fed Rate Reduction and Ongoing Liquidity Crunch
- XRP fell 6% after the Fed's September 2025 rate cut, triggering a crypto sell-off with $1.5B in leveraged liquidations. - Altseason Index dropped to 67, reflecting weak on-chain activity and institutional ETF inflow slowdowns as investors recalibrated risk. - XRP's $2.83 price and breached $3.00 support signaled technical fragility, compounded by liquidity challenges vs. Bitcoin/Ethereum. - Analysts note cautious optimism for long-term recovery, contingent on macroeconomic stability and ETF flow normaliz
Despite recent volatility in the market, XRP investors have shown notable perseverance. The cryptocurrency’s value dropped by 6% following the U.S. Federal Reserve’s interest rate cut on September 17, 2025. Although this was the Fed’s first rate decrease of the year and initially sparked optimism for a crypto surge, it instead led to widespread sell-offs among leading digital assets.
During the same timeframe, the Altseason Index—which tracks the momentum of alternative cryptocurrencies—fell sharply from 100 to 67, highlighting a shift in market sentiment. XRP’s challenges were made worse by sluggish on-chain metrics, such as a decrease in the Spent Output Profit Ratio (SOPR) to 1.01, suggesting some investors sold at a loss. Experts pointed out that the token’s technical outlook was weak, with crucial support at $3.00 breaking down and the inability to reclaim this level hinting at further declines.
Broader economic and institutional trends also contributed to the downturn. Inflows into Bitcoin ETFs, which had previously fueled institutional interest earlier in 2025, began to slow. Late September saw Bitcoin ETFs bring in just $15 million, the smallest weekly net inflow since the start of the year. At the same time, Ethereum ETFs experienced outflows, losing $1.89 million in a single day. These developments reflected a more cautious approach from institutions, as investors reassessed their positions amid uncertainty about the Fed’s next moves.
Analysts emphasized the fragile balance between leverage and liquidity in the market. Although the Fed’s rate cut was anticipated, policymakers’ hawkish comments—stressing data-driven decisions and fewer rate reductions in 2025—added to the uncertainty. This prompted a “sell the news” response, with traders closing long positions and scaling back leverage. XRP, which has less liquidity than Bitcoin and Ethereum, was especially susceptible to forced liquidations and margin calls.
While the short-term outlook remains cautious, some market observers are still positive about XRP’s future. The price movement indicates a period of consolidation, with resistance near $3.00 and support in the $2.70–$2.80 range. Ongoing institutional buying, including acquisitions by Japan’s Metaplanet and Bitcoin treasury companies, shows sustained interest in digital currencies. Nevertheless, XRP’s recovery will rely on overall economic stability, clearer regulations, and a rebound in ETF activity.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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