Why XRP is Going Down: Will it Hit $3 Before ProShares ETF Launch

XRP Faces Market Turbulence: Analyzing the Recent Downturn and Future Prospects

As of May 5, 2025, XRP, the cryptocurrency associated with Ripple Labs, has experienced a notable decline, trading at approximately $2.15. This represents a 6.82% decrease over the past week, with a 1.32% drop in the last 24 hours. The market capitalization stands at $127.47 billion, accompanied by a 24-hour trading volume of $1.87 billion. Several factors contribute to this downturn, including substantial token releases, regulatory delays, and shifts in investor sentiment.

Source: CoinMarketCap

Factors Contributing to the Decline

1. Escrow Release Increases Circulating Supply

On May 3, 2025, Ripple released 1 billion XRP tokens from escrow, deviating from its customary monthly release schedule. This release included 500 million XRP (valued at approximately $1.1 billion) transferred to an unknown wallet, and another 200 million XRP (about $440 million) sent to a different unidentified wallet. Such a significant influx of tokens into the market can increase the circulating supply, potentially exerting downward pressure on the token's price. 

2. Delay in ETF Approval by the SEC

The U.S. Securities and Exchange Commission (SEC) has postponed its decision on Franklin Templeton’s proposed spot XRP exchange-traded fund (ETF) to June 17, 2025. Initially submitted in March, the ETF was anticipated to receive a decision by May 3. While the delay does not equate to a rejection, it has led to disappointment within the cryptocurrency community. The postponement has also introduced uncertainty, potentially affecting investor confidence and contributing to the recent price decline. 

3. Decreased Network Activity

Recent data indicates a significant drop in the number of active XRP addresses, falling below 200,000. This decline suggests reduced network engagement, which could limit bullish momentum and further impact the token's price negatively. 

Potential for Recovery

Despite the recent setbacks, several developments may offer a positive outlook for XRP:

1. Upcoming ProShares Futures ETF Launch

ProShares is preparing to launch a futures-based XRP ETF on May 14, 2025. Although there was initial confusion regarding the launch date, this development is anticipated to bring increased attention and trading activity to XRP, potentially aiding in price recovery.

2. Ripple's Expansion into the UAE Market

Ripple has secured a license from the Dubai Financial Services Authority (DFSA), becoming the first blockchain payments provider authorized to operate in the Dubai International Financial Centre (DIFC). This approval allows Ripple to offer regulated crypto payments and services in the UAE, a region with a $400 billion trade market and $40 billion in remittances. This strategic move could enhance XRP's utility and adoption in the Middle East. 

Source: X

Technical Analysis

From a technical standpoint, XRP is trading around $2.15. The Relative Strength Index (RSI) is at 54, indicating weak bullish momentum without being overbought. The Moving Average Convergence Divergence (MACD) shows a slight bullish signal, with the MACD line marginally above the signal line.

If XRP's price surpasses the resistance level of $2.50, it could target $2.80 or even $3.00, provided the RSI approaches 70 and the MACD trend strengthens. Conversely, if the price falls below $2.00, it may decline further to $1.80 or $1.50, especially if the RSI drops below 50 and the MACD turns bearish.

Source: Polymarket

Conclusion

XRP's recent price decline is influenced by a combination of increased token supply, regulatory delays, and decreased network activity. However, upcoming events such as the ProShares futures ETF launch and Ripple's expansion into the UAE market present opportunities for recovery. Investors should monitor these developments and technical indicators closely to assess XRP's potential trajectory in the coming weeks.

Writer @Erlin

Erlin is an experienced crypto writer who loves to explore the intersection of blockchain technology and financial markets. She regularly provides insights into the latest trends and innovations in the digital currency space.

 

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