Why is XRP falling?

As of July 1, 2025, the price of XRP hovers around $2.23, significantly down from its previous high, even experiencing a single-day plunge of 10% in mid-June. This sharp decline has attracted widespread attention in the market, resulting from the interplay of multiple factors.

##Regulatory Pressure: Global Crackdown Triggers Trust Crisis The core pressure faced by XRP comes from regulatory uncertainty. The U.S. SEC continues to accuse XRP of being an unregistered security, and the legal tug-of-war with Ripple Labs has yet to conclude. Even more severe is the simultaneous strengthening of regulations by major economies such as the EU, Japan, and South Korea, creating a global compliance crackdown, which has led to multiple exchanges delisting XRP or restricting trading. As a result, institutional investors are turning to more compliant crypto assets, exacerbating the selling pressure.

Market Environment Dramatic Change: Complete Loss of Competitive Track

The core scenario of XRP's cross-border payments is being disrupted by emerging technologies:

• The rise of Central Bank Digital Currencies (CBDC): Many countries are launching sovereign digital fiat currencies, offering faster and lower-cost cross-border solutions, directly replacing XRP;
• DeFi and interoperability solutions squeeze: decentralized finance platforms divert user funds, and cross-chain bridge technology reduces reliance on XRP as a "bridge currency";
• Market share plummets: XRP's market share has dropped from a historical high to 3.9%, reflecting a decline in its competitiveness.

##Technological Stagnation: Ecological Innovation Power Exhausted In the rapid iteration of blockchain technology, XRP is gradually falling behind:

• Smart contract shortcomings: Unable to support complex DeFi applications, developers are turning to more flexible public chains like Ethereum;
• Loss of energy efficiency advantages: The new generation of eco-friendly chains (such as Solana) surpasses its energy efficiency performance, weakening the appeal of ESG investments;
• On-chain activity plummets: The number of daily active addresses has sharply decreased from the peak of 608,000 in March to 31,200, reflecting user loss and shrinking demand.

Market Sentiment and Technical Signals Deteriorate

Investor confidence is undermined, further amplifying the downward trend:

• Bearish on the technical side: The daily chart forms an "inverted V" structure, suggesting a possible decline of 20% to $1.70; the weekly RSI shows a bearish divergence, indicating a depletion of long-term upward momentum;
• Derivatives market contraction: The fluctuation of open interest in futures contracts is severe, reflecting the withdrawal of speculative funds.

##Conclusion The regulatory predicament, track replacement, and technological lag together form the "triple noose" for XRP's decline. In the short term, if the SEC lawsuit remains unresolved or market sentiment worsens, the price may drop to $1.70. Although Ripple is trying to boost its ecosystem through initiatives like Web3 collaboration in Japan, if it cannot break through the bottlenecks of regulation and technological innovation, the path to recovery for XRP remains fraught with uncertainty. Investors need to closely monitor regulatory rulings and on-chain activity indicators, carefully assessing risks.

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