As of March 1, 2025, XRP, which operates on the XRP Ledger, has seen a notable price drop. It is currently trading around $2.13, reflecting a 17% decrease over the past day and a 31% decline for the month. This significant downturn has left many in the XRP investor community pondering the reasons behind this plunge.
XRP’s recent price of $2.13 demonstrates a tumultuous climate for the cryptocurrency, with its market capitalization at about $24 billion, positioning it as the fourth-largest cryptocurrency after Bitcoin, Ethereum, and Tether. After experiencing a considerable increase of 250% in value over the last six months, the recent weeks have witnessed a stark reversal, with XRP losing 31% of its value in a short timeframe.
Several factors contribute to the ongoing decline in XRP’s price, the most substantial of which is the uncertainty stemming from legal challenges. The ongoing lawsuit with the U.S. Securities and Exchange Commission (SEC) has cast a long shadow over XRP since December 2020. Although Ripple secured a partial legal win in 2024 — with a ruling that clarified XRP is not classified as a security for retail sales — the ambiguity surrounding the lawsuit continues to impact trader sentiment negatively.
Additionally, there has been a broader correction in the cryptocurrency market. Overall investor sentiment turned notably bearish at the start of 2025, leading to widespread sell-offs across various digital assets. The total market cap for cryptocurrencies has dropped by approximately 6-8% as of late February 2025. As leading cryptocurrencies such as Bitcoin also saw substantial decreases in value, the negative sentiment further amplified the downward trajectory for XRP.
Another significant factor in XRP’s price decrease is related to the activity of large investors, often referred to as “whales.” Recently, these large holders have engaged in substantial sell-offs and token unlocks, increasing the supply of XRP on the market. On February 3, 2025, a scheduled release of 1 billion XRP from escrow resulted in considerable selling activity, prompting a sharp 24.6% decrease in price within just one day. Over the following few days, whale activities led to the sale of over 370 million XRP, further exerting downward pressure.
XRP’s network activity has also been on a decline, with a reported 50% reduction in usage since December 2024. The number of active addresses on the XRP Ledger has dropped from approximately 202,250 to 101,169, signaling a weakening user base and transaction volume, which often foreshadows price declines in cryptocurrencies.
Compounding all these challenges is the phenomenon of profit-taking among investors, particularly after substantial price increases. Following the recent downturn, around $22 million in long positions were liquidated in the futures market over just 24 hours, driving prices further down. This indicates many optimistic traders were forced to exit their positions, creating additional selling momentum and a corrective market phase.
In summary, the drop in XRP’s value can be attributed to a combination of factors, including legal uncertainties, market-wide sentiment shifts, aggressive selling by large investors, diminishing network activity, and the typical behavior of profit-taking following a rapid price increase.
Looking ahead, technical analysis suggests that XRP is currently testing a critical support level around $2.00, which has previously shown resilience. If XRP can regain its footing and push above previous local supports and resistance levels, it may set the stage for recovery. Analysts hold various opinions regarding future price trajectories; some are cautiously optimistic, while others highlight possible bearish scenarios based on prevailing market conditions.
Despite the challenges, there remains a mixed sentiment around future price predictions, with some analysts forecasting a potential rebound in March. However, the viability of these predictions depends heavily on market behavior, regulatory developments, and overall trader sentiment within the cryptocurrency landscape.