Will the ‘Liberation Day’ Tariffs Cause XRP to Drop Below $2?

There is a distinct possibility that XRP below $2 could soon become a reality.

Donald Trump’s ‘Liberation Day’ tariffs are set to be announced later today. While duties levied on imports don’t have a direct effect on the cryptocurrency market, they do have an indirect effect — which has proven to be no less impactful.

Simply put, the budding trade war brings resurgent fears of inflation, increases the possibility of recession, and decreases the odds of long-awaited rate cuts. This tends to make investors more than a little skittish — resulting in a risk asset selloff and a pivot to more conservative holdings.

At press time, XRP was changing hands at $2.12. A 14.02% drop on the weekly chart has brought year-to-date (YTD) gains down to 1.91%.

Despite a landmark legal victory, recent events have not provided enough of a catalyst to sustain an upward trajectory for the digital asset. The token has lost roughly $26 billion in market capitalization since the conclusion of the SEC case.

At present, the $2 mark represents a crucial and psychologically important support level. Ahead of the tariff announcements, crypto traders seem to have turned bearish. The possibility of XRP’s price falling below $2 is becoming increasingly plausible, especially if investors continue to offload risk assets.

On April 1 and April 2, short positions outnumbered long positions, per data retrieved by Finbold from CoinGlass. To be more precise, at present, the long/short ratio of XRP stands at 0.93, with 51.62% of newly opened positions being short sales.

In addition, on April 1, Ripple unlocked 500 million XRP— and with 500 million more well on the way, supply and demand dynamics could exert additional downside pressure.

While the present outlook remains bearish, the token’s long-term prospects appear to be intact, at least per technical analysts, as independent signals provider Investing Scope recently highlighted a possible channel up formation. If legitimate, the pattern could outline a pathway to levels as high as $6.50.

With that being said, readers should exercise caution in the near term, as significant volatility is expected in the coming days.

Featured image via Shutterstock

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