XRP Today News: Breaks below $2! Bank of Japan stirs the market, ETF funds become a key buffer

XRP on December 14 once fell below $1.98, touching the lowest point since November 23, failing to hold the $2 psychological level. This correction was mainly driven by market concerns over the Bank of Japan’s upcoming interest rate decision and the potential “neutral interest rate,” triggering panic in yen carry trades. However, the strong performance of the US XRP spot ETF with 19 consecutive days of net capital inflows provided a solid buffer for the price, highlighting the resilience of institutional demand. In the medium to long term, Ripple receiving a US banking license and the progress of crypto-friendly legislation together support the bullish fundamentals for XRP.

Market Shock: Bank of Japan’s “Neutral Interest Rate” Expectations Trigger Sell-Off

Last weekend, XRP’s price did not continue the previous rebound momentum, but instead declined amid market anxiety. The core pressure comes from across the Pacific in Japan. BOJ Governor Ueda last week signaled a clear intention to hike interest rates, citing improved wage growth and reduced US tariff risks. Currently, the market widely expects the BOJ to announce a 25 basis point rate hike at the December 19 (Friday) meeting, raising the policy rate from 0.5% to 0.75%. If this materializes, it would sharply contrast with the Fed’s 25 basis point rate cut last week, significantly narrowing the US-Japan interest rate differential.

This narrowing directly undermines the profitability of the globally popular “yen carry trade,” which involves borrowing yen at very low rates, converting to USD or other high-yield currencies, and investing in stocks, cryptocurrencies, and other risk assets. When Japanese interest rates rise and the interest rate spread shrinks, the appeal of this strategy diminishes, prompting investors to unwind positions and repay yen loans. Recently, the yield on 10-year Japanese government bonds has surged to the highest level since April 2007, reflecting heightened concerns and market anxiety.

Even more worrisome is the possibility that the BOJ might, at this meeting, explicitly define its “neutral interest rate” level for the first time. The neutral rate is the theoretical interest rate that neither stimulates nor restrains economic growth. If the BOJ sets a higher neutral rate, it implies more room for future rate hikes, further narrowing the US-Japan interest rate gap, and possibly triggering a larger-scale reversal of carry trades. Looking back to late July, a surprise tightening by the BOJ led to XRP plunging over 34% within days, illustrating how such factors can cause sharp short-term shocks in crypto markets, especially for assets closely tied to cross-border payments narratives like XRP.

ETF Inflows Continue to “Blood” the Market, Building a Strong Downside Defense

Despite macro headwinds, a powerful buying force is quietly limiting XRP’s decline. This force comes from sustained capital inflows into US spot ETFs. Data shows that in the week ending December 12, US XRP spot ETFs saw a total net inflow of $87.46 million. As a result, this ETF series has experienced 19 consecutive trading days of net capital inflow, with total inflows approaching $1 billion, reaching $974.5 million since launch.

This series of inflows is no coincidence; it clearly reveals increasing institutional interest in holding XRP. In a context of rising uncertainty in traditional markets, compliant crypto ETFs have become an important outlet for diversified capital allocation. Notably, the strong performance of XRP ETFs occurred amid a broader crypto market correction, further highlighting their unique demand and resilience. It is foreseeable that as XRP’s ecosystem expands and US crypto regulation becomes clearer, such products could attract even more capital, providing ongoing fundamental support for XRP’s price in the medium and short term.

A recent positive development further reinforces this logic: the US Office of the Comptroller of the Currency (OCC) announced conditional approval for Ripple to obtain a US national banking license. This milestone is significant, as it will enable Ripple to directly offer a range of services to US financial institutions. More importantly, gaining banking status will greatly enhance market trust in Ripple and its related stablecoin RLUSD. In the future, institutions using RLUSD will find it easier to exchange it for XRP for FX bridging, liquidity management, and cross-border payments, substantially driving XRP utility and value capture. As an investment tool, ETFs will serve as a key bridge connecting traditional capital with this growth narrative.

Technical Outlook Under Pressure but Key Support Remains Intact

From a purely technical perspective, XRP currently sits in a delicate position. After the decline on December 14, its price has moved below the 50-day and 200-day exponential moving averages, generally interpreted as a short-term bearish signal. However, as previously mentioned, strong fundamentals (ETF inflows, regulatory progress) are counterbalancing the technical picture, resulting in a fierce battle between bulls and bears.

XRP Key Levels and Market Indicators

• Current Price: Fluctuating around $1.98
• Recent Support: $1.91 (previous low), $1.82 (November low, key defensive line)
• Recent Resistance: $2.00 (psychological level), $2.21 (50-day MA)
• Mid-term Resistance: $2.35, $2.50 (200-day MA)
• ETF Net Inflows: Approximately $974.5 million
• Potential BOJ Rate Hike: 25 basis points (to 0.75%)

In Monday’s Asia session, XRP rebounded slightly by 0.91%, indicating some buying resistance. For traders, the key near-term focus is whether the price can effectively recover and hold above the $2 level. A successful breakout could lead to further tests of resistance at $2.20 and the 50-day MA. Confirming a break above the 50-day MA might trigger a short squeeze and technical buy signals, pushing the price toward a target of $2.35. Conversely, if the price remains below $2 and further dips below the critical support at $1.82, it could invalidate the recent bullish structure and prompt a deeper correction.

Short to Medium-Term Outlook: Battle of Three Forces

Looking ahead over the next few weeks, XRP’s trajectory will mainly depend on the outcome of three competing forces: the Bank of Japan’s monetary policy path, US XRP ETF capital flows, and US legislative developments.

The BOJ’s decision and future guidance are the main short-term uncertainties. However, analysis suggests that even if the BOJ raises rates by 25 basis points, Japanese interest rates will still remain well below US levels, maintaining profitability in carry trades, albeit with reduced attractiveness. Unless the BOJ signals aggressive “continuous rate hikes” or sets an extremely high neutral rate, its impact is likely to be temporary and volatile rather than a trend reversal.

On the other hand, US developments appear more optimistic. The bipartisan “Market Structure Act” is expected to be submitted to the Senate for a full vote in Q1 next year. If passed, this legislation would establish clear regulatory rules for the US digital asset market, greatly enhancing the legitimacy and attractiveness of assets like XRP to traditional institutions. Coupled with Ripple’s banking license, a narrative of “regulatory compliance” and “practical utility” is forming, laying a solid foundation for XRP’s mid- to long-term valuation.

Overall, although macro sentiment may cause short-term volatility, strong institutional demand (reflected in ETF flows) and improving regulation prospects together create a “safety net” and upward catalysts for XRP in the near to medium term. The market’s immediate target is around $2.35, and if resistance levels are broken in 4-8 weeks, the price could trend toward $2.50 or higher. Investors should also remain alert to potential risks such as BOJ policy shocks, ETF capital flow disruptions, or US legislative hurdles.

What is XRP? Not Just Ripple’s Token

Many new investors often equate XRP with Ripple Inc., but the relationship needs clarification. XRP is an independent digital asset launched in 2012, with a fixed total supply of 100 billion tokens, some held by the founding team, most managed and released by Ripple Labs according to a schedule. Ripple Inc. is a commercial entity that leverages XRP and its underlying technology (like RippleNet) to provide cross-border payment solutions to financial institutions.

XRP’s core value proposition lies in its role as a “bridge asset.” In Ripple’s envisioned cross-border payment scenarios, XRP can serve as an intermediary currency that enables fast, low-cost conversions between different fiat currencies. For example, an institution wishing to convert USD to JPY can first exchange USD for XRP, then XRP for JPY, with the entire process completed in seconds at minimal cost. Thus, XRP’s price outlook is closely tied to its actual adoption in cross-border payments. Recent approval of banking licenses by Ripple aims to deepen this utility and integrate more closely into the traditional financial system.

How Yen Carry Trades Influence the Cryptocurrency Market

Yen carry trades are a classic and long-standing strategy in global finance. Japan’s prolonged ultra-low or negative interest rate policies make yen one of the cheapest funding currencies globally. Traders borrow yen at low rates, sell and convert into USD, EUR, AUD, or other high-yield currencies, then invest in government bonds, stocks, or cryptocurrencies in these currencies to earn the interest rate differential and capital gains.

The crypto market, characterized by high volatility and high return potential, naturally becomes a target for yen carry trades. When the BOJ shifts toward tightening monetary policy and raises interest rates, two things happen: the cost of borrowing yen increases, and the yen itself may appreciate due to capital inflows. This prompts carry trade unwinding: traders sell off risk assets including cryptocurrencies, and buy back yen to repay loans. This collective, synchronized selling can exert significant downward pressure on crypto prices in the short term, with assets like XRP often bearing the brunt. Understanding this mechanism can help investors better anticipate and react to market swings triggered by macro monetary policy shifts.