Why Is XRP Dropping in May 2025? Here Are 5 Key Reasons

• XRP has dropped over 5% this week amid falling on-chain activity and social buzz.
• SEC’s ETF decision delay and Ripple’s RLUSD launch are shaking investor confidence.
• Technical indicators suggest XRP could slide further unless key support levels hold.

XRP is facing renewed bearish pressure in May 2025, sliding over 5% in the past week alone. The digital asset recently plunged to a two-week low of $2.07, as bears took control of the XRP price action. 

Adding to the cautious outlook, crypto analyst Ali Martinez noted in a recent post on X (formerly Twitter) that a TD Sequential indicator on XRP’s 3-day chart has flashed a sell signal, hinting at further price correction. 

Several factors appear to be contributing to this current downturn for XRP. Here are five key reasons behind the digital asset’s price dip.

Five Reasons for the XRP Price Dip

1. XRP Ledger Activity Drop

A primary reason for XRP’s ongoing price weakness is a sharp drop in activity on the XRP Ledger. Daily active addresses have nosedived to just 21,000, a steep fall from December’s highs of 108,000. 

This collapse in user engagement directly correlates with weaker transaction volumes and reduced liquidity on-chain. Lower network activity often translates into lower demand.

2. ETF Delays Sapping Investor Confidence

Investor confidence has also been affected by the U.S. Securities and Exchange Commission (SEC) delaying its decision on Franklin Templeton’s spot XRP ETF proposal. The SEC has pushed its decision deadline to June 17, 2025.

This postponement defers any potential influx of institutional capital that an ETF approval might bring to XRP. However, as per Polymarket, the chances of approval of a spot XRP ETF in 2025 now stands at a massive 77%.

Related: Ripple XRP’s True Value: Jeff Dorman Says It’s All Social Hype, Not Real Utility

3. Falling Social Buzz

Over the past three months, XRP has seen a notable decline in community discussions compared to other leading cryptocurrencies, as pointed out in its biweekly report by Santiment.

“Interestingly, the overall level of discussion toward XRP (relative to other top cryptocurrencies) has been declining steadily over the past three months,”

4. Broader Market Pressures Ahead of FOMC Meeting

Macro uncertainty ahead of the upcoming FOMC (Federal Open Market Committee) meeting has caused traders to adopt a risk-off stance. XRP, like many altcoins, has been hit hard as fears over tighter monetary policy grip the market. 

The FOMC meeting is scheduled for later today and could severely impact Bitcoin (BTC) and the broader digital asset space.

5. Ripple’s Focus on RLUSD Sparks XRP Doubts

Ripple’s launch of RLUSD, a USD-backed stablecoin designed to complement the XRP ecosystem, has had unintended consequences. 

While RLUSD is quickly gaining ground as a bridge currency for cross-border transactions, its emergence has cast doubt over XRP’s long-term role. Crypto market participants voiced concerns that RLUSD could marginalize XRP, especially if the stablecoin becomes the preferred asset within Ripple’s financial stack. 

Technical Analysis, What’s Next for XRP?

On the technical front, XRP’s Relative Strength Index (RSI) currently sits at 46.56, dipping below the neutral 50 zone, a signal that bears are gaining traction.

Related:  XRP Price Prediction for May 7: Will Support at $2.10 Hold Amidst Bearish Momentum?

Meanwhile, Bollinger Bands show XRP trading at $2.13, just below the midline band at $2.17, with the lower band at $2.05 and the upper band at $2.29. A close below $2.05 could open the door to deeper downside, while reclaiming $2.29 would signal renewed bullish momentum.