Why Did XRP Plummet 6.2% Today?
Key Points
The head of Japan's central bank hinted that an interest rate hike was possible.
Rising interest rates in Japan could unwind a significant amount of leveraged crypto positions.
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XRP (CRYPTO: XRP) is down 6.2% in the last 24 hours as of 7:15 p.m. ET on Monday. The drop comes as the S&P 500 fell 0.6% and the Nasdaq Composite slid 0.4%.
With CoinMarketCap's market sentiment tracker nearly tipping into "extreme fear," XRP and the broader crypto market continue to fall. Today, comments from the head of the Bank of Japan (BOJ) opened the door for an interest rate hike, adding fuel to the fire.
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Investors are wary of a repeat of 2024
As the U.S. Federal Reserve appears poised to lower U.S. rates, the BOJ could be moving in the opposite direction. BOJ Governor Kazuo Ueda said Monday that the BOJ is weighing the "pros and cons" of raising interest rates.
That's significant because it could lead to a cascade of liquidations, with investors who borrowed Japanese yen to purchase XRP forced to sell to cover their positions.
Image source: Getty Images.
Similar dynamics led to a flash crash in August of 2024, when a major unwind led to the whole crypto market falling hard.
XRP is still overvalued
XRP is risky. While the technology surrounding it is extremely useful, its current valuation is driven primarily by hype and a fundamental misunderstanding of its tokenomics.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.
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