Why is XRP price down today?

XRP dropped 7.25% on Jan. 18 to $3.05, as traders responded to unfounded rumors surrounding President-elect Donald Trump’s alleged plans to include the cryptocurrency in a proposed US strategic reserve.No proof yet of Trump considering XRPXRP price jumped over 45% earlier this week, nearing its all-time high of $3.55 (Binance), as market sentiment turned increasingly bullish ahead of Donald Trump’s inauguration on Jan. 20.There was, however, a strong rumor behind the XRP price boom, as well. The New York Post claimed on Jan. 16 that the Trump administration may create an “America-first strategic reserve” that would include US-based cryptocurrencies like XRP.XRP formed a local top of around $3.40 on the same day. But the price has declined by over 10% since, including the 7.25% drop today. That is primarily due to the lack of any confirmation regarding the New York Post claim.Additionally, the excitement around the XRP reserve news was overshadowed by reports of a supposed fallout between Trump and Ripple over political donations to Kamala Harris.Stuart Alderoty, chief legal officer at Ripple, denied these allegations.Over $17M in long XRP positions liquidatedThe drop in XRP price has been accompanied by massive long liquidations in its derivatives market, according to data from CoinGlass. The liquidation heatmap below reveals that the XRP futures market witnessed the liquidation of over $17.22 million worth of long positions in the last 24 hours. In comparison, only $8.56 million worth of short positions were liquidated in the same period.Bullish traders are forced to sell their positions when long positions are liquidated, adding furhter downward pressure on the price.This mirrors the $72.6 million in long liquidations between Dec. 18 and Dec. 20, which accompanied a 23% price drop over the same period, setting a low at $1.95.XRP price risks another 30% dropXRP’s losses today follows signs of growing bearish divergence between its rising prices and falling relative strength index (RSI). It suggests weakening upward momentum behind XRP's rally, increasing the likelihood of a price reversal in the coming days or weeks.XRP's price continues to trade well above its 50-day exponential moving average (50-day EMA; red wave), a crucial technical support level.As of Jan. 18, the 50-day EMA is positioned near $2.28, approximately 30% below XRP’s current price of $3.21. Historically, overextended price rallies often retrace toward their EMA levels as traders take profits and market conditions normalize. For instance, a similar scenario occurred in 2018, when a bearish divergence signal preceded an 80% price correction.This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.