Why XRP Is Sinking Today

Since late afternoon yesterday, XRP (XRP -2.79%) traded nearly 6% lower as of 1:05 p.m. ET today, seemingly due to news about the creation of the U.S. Strategic Bitcoin Reserve, which failed to excite investors hoping for more from the initiative.

A disappointing executive order

President Donald Trump announced the creation of a U.S. Strategic Bitcoin Reserve and a Digital Asset Stockpile. Investors have been excited about this because they believed that if the U.S. government began buying massive hoards of certain cryptocurrencies, the price of those tokens would surge. XRP had previously been cited as one of the cryptocurrencies included in the stockpile.

However, investors found themselves looking for more. Both the strategic reserve and stockpile will be capitalized by tokens already obtained through the U.S. Treasury Department through forfeiture. The order also stated that while officials could purchase more Bitcoin under certain circumstances, they will not purchase additional tokens for the Digital Asset Stockpile.

“Not only have they confirmed they can buy more Bitcoin, but they also cannot sell it. In contrast with other cryptocurrencies, they can sell but cannot buy more,” CoinCorner CEO Danny Scott said, according to Barron’s.

A bit deflating

Since Trump won the election last November, it’s been good news for crypto, so the details about the strategic reserve and stockpile may feel somewhat deflating, especially for cryptocurrencies other than Bitcoin. Riskier assets have also been under pressure, as the market frets about a weakening consumer and the impact of tariffs.

I’m still somewhat bullish on XRP and see potential catalysts ahead, including the potential end of a long-standing lawsuit with the Securities and Exchange Commission and the creation of an XRP spot exchange-traded fund (ETF). That said, XRP will be volatile and highly influenced by the direction of Bitcoin and the broader crypto sector, so I’d recommend keeping positions smaller and more speculative.