Ripple (XRP) Traders Cut Leverage 67% after CPI Report: Will Price React?

XRP Traders Cut Funding Rates 90% after Hawkish CPI Data:

XRP price tumbled 4% on Sept 11 to hit $0.54, as markets react to hawkish figures in the latest (CPI) inflation data published by US authorities on Wednesday, on-chain data trends suggest the ongoing correction phase could linger.

XRP Price Tumbles 4% on Inflation Figures

On Sept 11, XRP’s price tumbled by 4% to $0.54 as investors reacted to the latest US Consumer Price Index (CPI) data, which showed higher-than-expected inflation.

The cryptocurrency market, which had experienced mild gains after the release of dovish Non-Farm Payroll (NFP) data on Sept 6, was shaken once again by the hawkish inflation report.

The chart above shows how XRP price tumbled 4% to hit $0.54 at the time of writing on Sept 11, ending an impressive run 4 consecutive days in profit.

In parallel, the TOTAL3 chart shows that global altcoin markets lost over $22 billion, mirroring XRP’s 4% drop. The timing, suggest this bearish reversal is linked to hawkish inflation data.

As inflation remains higher-than-expected, the US Federal Reserve might delay the anticipated interest rate cut during the Federal Open Market Committee (FOMC) meeting on Sept 17-18.

Hence, the sharp bearish reversal on Sept 11 has after a nearly a week of steady gains, has sparked major concerns among XRP traders.

US CPI Data Dampens Hopes for Interest Rate Cut

On Sept 11, the US Bureau of Labor Statistics reported that core consumer prices, which exclude volatile food and energy costs, increased by 0.3% in August, surpassing the 0.2% market forecast.

This was a slight uptick from July’s 0.2% increase, signaling that inflationary pressures are still present in the economy. Core inflation, considered a more reliable gauge of underlying price trends, has remained resilient despite earlier signs of a cooling economy.

According to TradingEconomics, the annual core consumer price inflation rate stood at 3.2% in August, marking an over three-year low but still above the Federal Reserve’s target of 2%.

This inflation data, coupled with stable unemployment figures (4.2% in August), has caused analysts to reassess the likelihood of the Fed cutting rates during its upcoming meeting.

A rate cut, which was widely anticipated after the July CPI data showed inflation dipping to 2.9%, now seems less certain, leaving markets in a state of uncertainty.

XRP Traders Cut Funding Rate 67%

With inflation higher-than-expected, the Fed may opt for a more cautious approach, which could prolong the correction phase for XRP and other cryptocurrencies.

While prices only dipped 4%, XRP volume-weighted funding rate dropped sharply from 0.006% to 0.002% between Sept 10 and 11—a 67% decline.

The XRP funding rate trend chart above measures the cost to maintain long or short positions in the market. The 67% decline shows that just hours after the CPI data was released, bull traders reacted negatively and began cutting-down on their LONG leverage exposure.

While the funding rate remains positive, this steep decline signals growing caution among XRP traders, as concerns over tighter monetary policy could fuel further selling pressure.

XRP Price Forecast: $0.50 Reverse in Motion?

If no new bullish catalysts emerge to counter the negative sentiment driven by the CPI data, XRP could be at risk of a breakdown towards the $0.50 support level.

Currently, the Keltner Channel (KC) bands indicator shows that XRP remains in a bearish trading range, with the relative strength index (RSI) dropping to 42.76, the trading momentum is weakening.

While immediate support is visible at $0.5101.XRP fails to gain a bullish catalyst soon, the pressure from inflation concerns and funding rate declines could push the price toward the next major support at $0.50.

However, a break above $0.5526 would be necessary to reverse this bearish sentiment, with $0.5951 as the next upside target.

Given the current macroeconomic climate, XRP traders should brace for potential further corrections unless there is a shift in market sentiment.