In the early days of May 2025, the digital currency XRP is facing severe downward pressure, losing over 5% in value within just one week. The most recent price has fallen to a two-week low of $2.07, indicating a clear downward trend.

Adding to the bearish sentiment among investors, crypto analyst Ali Martinez recently posted on social media X (formerly Twitter) that the TD Sequential indicator on XRP's 3-day chart has issued a sell signal – a sign that prices may continue to adjust downward in the short term.

Here are the 5 main reasons why XRP is experiencing severe depreciation:

1. Decrease in Activity on XRP Ledger

One of the main reasons for the current selling pressure is the significant decline in activity on the XRP Ledger network. The number of daily active addresses has dropped to 21,000, a sharp decline from the peak of 108,000 last December.

The decrease in user interaction typically leads to weak trading volumes and poor liquidity, thereby reducing the natural demand for XRP.

2. ETF Approval Delay Causes Investor Distrust

Investor confidence is also wavering as the U.S. Securities and Exchange Commission (SEC) continues to delay its decision on Franklin Templeton's XRP ETF proposal. The agency has pushed the deadline for a decision to June 17, 2025.

This delay extends the waiting time for potential institutional cash flows, which could flow into the market if the ETF is approved. However, according to the prediction exchange Polymarket, the likelihood of XRP's ETF being approved this year is still high – 77%.

3. Decreased Appeal on Social Media

Santiment's bi-weekly report shows that the level of discussion surrounding XRP on social media is gradually decreasing, especially compared to other leading cryptocurrencies like BTC, ETH, or SOL.

The decline in community interest is a negative signal, indicating that XRP is gradually losing its position in the eyes of retail investors.

4. Broader Market Pressure Ahead of FOMC Meeting

Uncertainty about monetary policy ahead of the U.S. Federal Open Market Committee (FOMC) meeting has led many traders to adopt a 'risk-averse' strategy. XRP – like many other altcoins – is heavily impacted by the fear that the Fed may continue to tighten monetary policy.

The FOMC meeting will take place today, and the results from the meeting could cause significant volatility across the entire cryptocurrency market, especially for BTC and altcoins like XRP.

5. Launch of RLUSD Raises Concerns About XRP's Role

Ripple recently launched RLUSD, a stablecoin backed by USD intended to serve their global financial ecosystem. Although RLUSD's goal is to support and complement XRP, the rapid development of this stablecoin has raised concerns that XRP's role will be overshadowed.

In the context of RLUSD gradually becoming the primary intermediary asset in cross-border transactions, some analysts are concerned that XRP could be sidelined from the main ecosystem that Ripple is building.

Technical Analysis: Short-Term Trend of XRP

  • The RSI (Relative Strength Index) is currently at 46.56, below the neutral level of 50 – a sign that the sellers are in control.

  • According to Bollinger Bands, XRP is trading at $2.13, below the midline at $2.17.

    • If the closing price falls below $2.05, XRP could extend its downward trend further.

    • Conversely, if it breaks through the resistance level$2.29, the market could revert to an upward trend.

In summary: With a series of negative factors from macro to internal network issues, combined with not-so-positive technical signals, XRP is at risk of further short-term adjustments. Investors should closely monitor the developments from the FOMC meeting as well as the market's reaction to RLUSD to reassess their investment strategy.