Why XRP Is Falling Today

Key Points

• The trajectory of interest rates will have a big effect on crypto prices.

• New data this morning pointed to an economy on sound footing.

• 10 stocks we like better than XRP ›

Most cryptocurrencies continued to struggle today after a flash crash earlier this week that may have removed some leverage out of the space. Today, however, investors seem more focused on economic data as they continue to grapple over how many interest rate cuts the Federal Reserve will make between now and the end of 2026.

Since yesterday afternoon, the price of XRP (CRYPTO: XRP) was roughly 4% lower, as of 12:06 p.m. ET today.

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The Fed is cutting rates in a decent economy

Heading into the Fed's meeting earlier this month, most of the market thought the Fed could potentially cut rates five or six times between now and the end of 2026. But Fed Chairman Jerome Powell called the recent quarter-point cut a "risk management cut" in case the economy were to slow significantly. The majority of Fed members expect another two rate cuts this year and then only one in 2026.

Image source: Getty Images.

While this could certainly change, new economic data this morning still points to a strong economy. Weekly jobless claims showing people filing for unemployment for the first time came in at 218,000 for the week ending Sept. 20, well below estimates and down by 14,000 from the week prior.

Second-quarter gross domestic product (GDP) was revised higher to 3.8%, the best quarter in over two years.

Crypto investors were likely looking for weaker data that would lead the Fed to have a longer rate-cutting cycle. Lower interest rates tend to lead to more-speculative investments like crypto.

Not much margin for error

XRP has been a great investment over the past year, but with the market expecting so many rate cuts until recently, crypto prices could be vulnerable if the market's expectations for cuts continue to come down.

The crypto has a strong technical network and the potential to disrupt the international payments space, but it is still very volatile, so I think XRP is worth a smaller, more speculative investment at this time.

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Bram Berkowitz has positions in XRP. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.