XRP Lost Almost 10%. Will it Retrace Further or Recovery is in Sight?

XRP was one of the worst-hit cryptocurrencies on Tuesday, losing almost 10% as the broader market reacted to the U.S. Senate’s failure to advance the CLARITY Act. Traders began a modest buyback on Wednesday, but their efforts have yet to produce a meaningful recovery.

It was the worst-performing asset among the top 10 cryptocurrencies, which is particularly notable because it is not the most volatile asset in the group.

The broader cryptocurrency market is also yet to fully recover from Tuesday’s selloff. The Senate vote added to already weakening bullish sentiment, with the CLARITY Act falling short of the 60 votes required to advance. The 50–49 procedural vote effectively stalled the legislation, although the bill could potentially be reconsidered later.

The impact on XRP may be particularly significant because of Ripple’s close association with the legislation. Ripple CEO Brad Garlinghouse has been a prominent supporter of the CLARITY Act, which seeks to establish a clearer regulatory framework for digital assets and define the roles of the SEC and CFTC.

The setback is especially important given Ripple’s previous legal battle with the SEC. Without comprehensive legislation, concerns about regulatory uncertainty remain. Speaking about the implications of not passing the act, Garlinghouse said, “Now, the SEC, under Chair Atkins, and the CFTC, under Chair Selig, will continue to work hard to issue rules to fill the legislative gap.”

While Ripple and the broader crypto industry digest the setback, another major catalyst is already approaching: interest rates. The US FOMC is scheduled to deliver its decision later on Wednesday, while the Bank of Japan is set to announce its decision on Friday.

Beyond these macroeconomic developments, XRP has also experienced a structural shift on the 1-day chart. The next direction remains uncertain, but several indicators are pointing toward continued downside risk.

XRP’s Next Possible Stop: $1.16

XRP retraced from $1.46 to $1.26 during its latest decline. Along the way, it broke below a key support level at $1.33, which had held for more than two weeks.

Since losing $1.33, XRP has hovered around $1.26. However, previous price action does not indicate a significant concentration of demand around this level, raising concerns that the support could fail if selling pressure increases.

Liquidation heatmaps show growing activity around the current price. Over the past 24 hours, CoinGlass data has identified notable positions around this area. However, the concentration remains relatively small, with the volume below $5 million, meaning it does not provide a strong enough signal on its own to confirm a reversal.

If XRP loses $1.26, another 8% decline could push the asset toward $1.16.

The 1-day chart also supports this possibility, with relatively few major support levels standing between the current price and $1.16. Interestingly, $1.16 previously acted as a significant resistance zone. If XRP reaches this level, that former resistance could potentially become an important support.

Adding to the bearish outlook is the Moving Average Convergence Divergence (MACD). The indicator recorded a negative crossover last month after the asset peaked, signaling a potential shift in momentum. Since then, the asset has continued to trade within a broader downward pattern.

Unless the fundamentals improve, XRP could extend its decline and end the week below $1.16.

On-chain data also points to continued downside risk. According to CryptoQuant, XRP exchange reserves began rising around August 21 as deposits increased. The trend has continued alongside the decline in price, suggesting that selling pressure could remain elevated.

Meanwhile, the broader crypto market has begun recovering, with most major assets trading in the green. XRP, however, has yet to show the same strength, suggesting that its weakness may be more than just a market-wide reaction

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