XRP (XRP) reached my measured upside target of $1.15 last week. As of Friday, though, the Ripple-backed token was already giving back gains. I now expect the token to correct by up to 40% in the coming days.
Why I'm Bearish On XRP Right Now?
Three major factors are keeping me bearish on XRP: renewed geopolitical risks, a more hawkish Federal Reserve, and an ongoing bearish technical breakdown.
1. US-Iran War Risks Could Fuel Another Inflation Shock
The renewed US-Iran conflict is once again threatening global energy markets, particularly amid concerns about shipping disruptions near the Strait of Hormuz. Oil and fuel markets remain vulnerable to supply shocks, with recent hostilities already contributing to sharp energy-price volatility.
Higher oil prices can feed into broader inflation by raising transportation, manufacturing, and other energy-related costs.
In turn, stubborn inflation gives the Federal Reserve less room to ease monetary policy. Higher-for-longer interest rates, or further hikes, typically reduce investors' appetite for riskier assets.
Cryptocurrencies sit firmly in that risk bucket. So, another oil-led inflation shock could pressure Bitcoin and the broader crypto market, dragging XRP lower with them.
2. The Federal Reserve Is Turning Increasingly Hawkish
The macro backdrop is getting worse for XRP.
Futures traders use 30-Day Fed Funds futures to price the probability of rate changes at upcoming Federal Reserve meetings, according to the CME FedWatch tool.
As of this week, markets are assigning around a 60% probability to a September rate hike. The repricing comes as inflation concerns grow, with minutes from the Fed's June meeting showing policymakers becoming more worried about price pressures.
Higher rates make cash and interest-bearing assets relatively more attractive while draining liquidity from speculative markets.
That is generally bad news for cryptocurrencies such as XRP.
3. XRP's Bear Pennant Breakdown Targets $0.68
XRP's three-day chart is flashing a major technical warning.
The token has broken below a bear pennant, a bearish continuation pattern that forms when price briefly consolidates after a sharp decline. A breakdown usually signals that the previous downtrend may resume.
XRP three-day price chart tracking the bear pennant breakdown. Source: TradingView
The measured move puts XRP's downside target near $0.68, roughly 40% below current prices near $1.10.
XRP also remains below its 20- (green), 50- (red), and 200-period (blue) EMAs, while its three-day RSI sits near 39.
Unless the token reclaims its 20-3D EMA near $1.18, the path of least resistance remains lower.XRP price risks a 40% drop toward $0.68 as US-Iran war risks, hawkish Fed bets, and a bear pennant breakdown pressure the token.
This article was originally posted on FX Empire
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