What are the main factors causing the decrease in XRP price?

XRP is currently facing significant challenges as its price has dropped below key levels, including $0.60, $0.59, $0.57, and $0.55 since the beginning of the year. Despite a promising start on New Year’s Day, XRP has struggled this month, experiencing a 16% loss in just 24 days. This is the most significant decline since August 2023 when it plummeted by 26.75%.

The primary reason for the decline in XRP’s value is the overall drop in the cryptocurrency market, particularly Bitcoin. In the past week alone, the entire cryptocurrency market lost $130 billion, with XRP losing 11% of its value. Initially, Bitcoin’s price surged to $48,969, which also lifted other coins like XRP, reaching $0.6240. However, Bitcoin prices subsequently fell as major Bitcoin holders and long-term investors sold a substantial amount of their holdings.

The Grayscale Bitcoin Trust (GBTC), which imposes high fees, also contributed to the selling pressure. Significant investors opted to sell their GBTC shares and invest in other assets, resulting in an 8.05% decrease in Bitcoin prices over the past week. As XRP and other cryptocurrencies typically follow Bitcoin’s market movements, they also experienced a decline in value.

Meanwhile, there is growing speculation about the potential approval of a spot XRP exchange-traded fund (ETF), particularly in light of the approval of spot Bitcoin ETFs and ongoing discussions regarding crypto ETFs. Advocates of a spot XRP ETF highlight the clear legal standing of XRP. The market’s desire for an XRP ETF was evident when a fake BlackRock iShares XRP ETF appeared on the official Delaware ICIS platform last November. However, despite calls for such a product, no asset manager has taken the initiative to file for it.

The recent drop in Bitcoin and XRP prices can be attributed to whales, referring to large cryptocurrency holders, selling off their holdings. For example, Ripple initiated a significant movement by transferring 29.1 million XRP to Bitstamp on Monday. Data from Santiment supports this trend, showing an increase in the number of addresses holding 10-100 million XRP while those with 100 million to 10 billion XRP have notably decreased this month. The selling pressure from major holders is shaping the current dynamics of the cryptocurrency market.

The decline in XRP’s value can be attributed to both market sentiment and development activity on the XRP Ledger (XRPL), as these factors are closely intertwined. A bullish market sentiment is often influenced by higher development activity and an influx of developers. Currently, XRP has 45 full-time developers, placing it 49th among mainstream blockchains.