The cryptocurrency market experienced a broad-based decline as a stronger US dollar put pressure on digital assets, with XRP leading the losses on Monday.
XRP Leads Crypto Drop Amid Strong Dollar, Year-End Uncertainty
The token has fallen by 5% in the past 24 hours, outpacing declines of up to 2% in other major cryptocurrencies like Dogecoin (DOGE), Solana (SOL), Ethereum (ETH), and BNB.
The strength of the dollar, as measured by the U.S. Dollar Index (DXY), has historically led to lower demand for dollar-denominated assets such as Bitcoin (BTC) and gold.
Asian stocks also fell, with the Asia-Pacific index reversing a five-day gain. S&P 500 and Nasdaq futures pointed to further losses in the U.S. trading session.
The decline came as investors adjusted their positions amid year-end uncertainty. Despite a 47% increase in bitcoin prices in the last quarter, the expected “Santa Claus rally” failed to materialize, with BTC prices falling by around 4% in December.
The stronger dollar is linked to reduced expectations that the Federal Reserve will continue to cut interest rates and cautious optimism about macroeconomic policies.
In the current environment, investors prefer traditional investments such as U.S. Treasury bonds and stocks that provide returns in a strong dollar scenario.
While the market is facing short-term challenges, some analysts remain optimistic about the long-term direction of crypto markets.
WeFi co-founder Maksym Sakharov expressed confidence in the resilience of bitcoin and altcoins despite the current consolidation. “The recorded sell-off is due to the market’s knee-jerk reaction to uncertainties regarding macroeconomic policies,” he said.
*This is not investment advice.
