Why is XRP price down today?

XRP (XRP) fell on April 7 as the wider crypto market sold off, and the US-led tariff war dragged on into a third day. Nearly $60 million worth of XRP futures positions were liquidated over the last 24 hours and analysts said that the lack of enthusiasm among derivatives traders was weighing down XRP price.

XRP drops in tandem with the broader crypto market

This broader crypto market correction stemmed from the risk-off sentiment recently adopted by traders.

US President Donald Trump recently announced trade tariffs on US trading partners as part of his administration’s economic strategy. Targeting nations like China and the EU with steep import taxes, these tariffs have ignited fears of a global trade war. 

XRP, just like other risk-on assets, is particularly sensitive to such disruptions. Investors are worried that reduced international trade volume could dampen demand for XRP’s use case, driving its price down. 

Over $59 million in long XRP positions liquidated

XRP’s bearishness on April 7 is accompanied by significant liquidations in the derivatives market, signaling strong downward pressure. Over $59 million worth of long XRP positions were liquidated, and $11.56 million in short liquidations took place.

The scale of these liquidations mirrors the period between Feb. 2 and Feb. 4, when a total of $112.25 million in long XRP positions were wiped out. This accompanied a 40% drop in price from $2.97 to a four-month low of $1.76 over the same period.

Related:  XRP price sell-off set to accelerate in April as inverse cup and handle hints at 25% decline

Dropping open interest and negative funding rates

XRP’s price action also reflects a lack of enthusiasm in its derivatives market, as evidenced by low open interest and funding rates. XRP’s open interest fell to $2.87 billion and is 63% below its peak of $7.8 billion witnessed on Jan. 18.

Declining OI means less capital is entering the market, which can exacerbate the price decline as buying pressure dries up.

Compounding this issue are negative funding rates in XRP perpetual futures markets. This metric has remained negative most of the time since early March, and when rates turn negative, shorts (bets against the price) pay longs to keep their positions open, suggesting bearish sentiment. 

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.