XRP's 6% Drop as Fed's Rate Cut Collides with Liquidity Crisis

XRP holders have demonstrated resilience amid recent market turbulence, as the cryptocurrency's price declined by 6% in the wake of the U.S. Federal Reserve's rate cut on September 17, 2025. The move, which marked the first rate reduction of the year, initially raised hopes for a crypto rally but instead triggered a broad sell-off across major assets. XRP, like Bitcoin and Ethereum, faced significant pressure, with its price dropping to $2.83 within 24 hours. This decline was exacerbated by speculative unwinding and leveraged liquidations, which saw over $1.5 billion in long positions erased across exchanges.

The Altseason Index, a metric gauging altcoin momentum, plummeted from 100 to 67 in the same period, reflecting a broader shift in investor sentiment. XRP's struggles were compounded by weak on-chain activity, including a drop in the Spent Output Profit Ratio (SOPR) to 1.01, indicating some holders began selling at a loss. Analysts noted that the token's technical structure appeared fragile, with key support levels around $3.00 breaching and a failure to reclaim $3.00 signaling further downside risks.

Institutional and macroeconomic factors also played a role in the selloff. Bitcoin ETF inflows, which had driven institutional adoption earlier in 2025, showed signs of slowing. While Bitcoin ETFs recorded a modest $15 million inflow in late September, this marked the lowest weekly net inflow since the year's start. Ethereum ETFs, meanwhile, faced redemptions, losing $1.89 million in a single day. These trends underscored a cautious institutional stance, with investors recalibrating exposure amid uncertainty over future Fed policy.

Market analysts highlighted the delicate interplay between leverage and liquidity. The Fed's rate cut, though priced in, was accompanied by a hawkish tone from policymakers, who emphasized data-dependent decisions and fewer-than-expected rate cuts in 2025. This uncertainty triggered a "sell the news" reaction, with traders exiting long positions and reducing leverage. XRP, with its lower liquidity compared to Bitcoin and Ethereum, became particularly vulnerable to margin calls and cascading liquidations.

Despite the bearish near-term outlook, some analysts remain optimistic about XRP's long-term prospects. The token's price action suggests a consolidation phase, with key resistance around $3.00 and support near $2.70–$2.80. Institutional accumulation, including purchases by Japan’s Metaplanet and Bitcoin treasury firms, signals continued confidence in digital assets. However, XRP's path to recovery will depend on broader macroeconomic stability, regulatory clarity, and a potential stabilization in ETF flows.