A crypto market analyst and trader has projected how much lower XRP could still drop from here, identifying what he believes is behind the current market struggles.
The crypto market tried to rebound earlier this month, but that momentum faded prematurely. Notably, prices slipped again, and XRP, which was one of the victims of this drop, now trades around $2.07, extending a losing streak that has lasted since October.
Crypto Market Still Following Normal Risk Cycles
Amid the struggles, Cypress Demanincor, CEO of CYPRX Superior Trading, highlighted what he believes are the reasons behind the continued weakness and explained how far XRP might still fall before conditions turn around.
In a post on X, Demanincor said crypto still follows normal risk cycles. Specifically, traders rush in when markets lean risk-on, but they retreat the moment conditions shift toward risk-off.
However, despite the current downturn, he said he feels more optimistic heading into 2026 than he has in years, especially now that the United States finally offers regulatory clarity. He argued that many investors still underestimate how important that change is.
XRP and Crypto Under Pressure
Demanincor called attention to the broader market to show how pressure has been building. At the time of his analysis, the total crypto market had lost more than $90 billion, and he said XRP’s weakness comes from obvious macro issues rather than anything happening inside the XRP ecosystem.
He added that altcoins across the market have been sliding for months, something he and his community expected long before retail traders caught on.
Demanincor reminded his audience that he called out early signs of a yen carry trade unwind on Sept. 28. He said many people dismissed him, and he saw the same reaction when he released a 45-minute breakdown on Nov. 23 outlining the same problem.
However, by Dec. 5, outlets like Yahoo Finance had begun discussing how the yen carry trade and the Bank of Japan’s sudden policy shift, could hit Bitcoin and the broader crypto space.
How the Yen Carry Trade Is Impacting the Market
He explained that the latest round of selling came after new signals from the Bank of Japan’s leadership. Hawkish remarks from Governor Kazuo Ueda pushed traders to expect faster rate hikes.
Demanincor highlighted a Bloomberg report indicating that BOJ officials were preparing to raise rates at their upcoming meeting. Notably, the markets now expect a 25-basis-point hike on Dec. 14, with more increases in 2026.
Specifically, analysts at MUFG even project that BOJ may take rates to 1.25% by the end of 2026. Demanincor also pointed out that Japan’s household spending just saw its steepest drop in nearly two years, Japanese yields keep climbing, and the 2-year JGB now sits above 1% for the first time since the 2008 crisis.
He said all of this matters because the yen carry trade has fueled global liquidity for almost thirty years. For context, investors borrow cheap yen, convert it to dollars, and push that money into higher-yield assets, including leveraged crypto positions, especially in Asia.
When Japan raises rates or the yen strengthens, the unwind can hit markets hard. He reminded traders that a BOJ hike in August 2024 erased more than $600 billion from the crypto market in one day and over $700 billion that week, along with more than $1 billion in forced liquidations.
Two Possible Paths for the BOJ
Considering these, Demanincor presented two possible outcomes for the upcoming BOJ decision. First, if the rate hike lands in line with expectations, markets may already have priced in the damage, which could lead to a “sell the rumor, buy the news” bounce.
However, if the BOJ takes a more aggressive stance or signals steeper hikes heading into 2026, the carry trade unwind could intensify and trigger another sharp drop, especially in crypto, which he described as the highest-beta risk asset.
Another Factor Contributing to Market Pressure
Meanwhile, Demanincor also highlighted a second factor contributing to the crypto market’s downturn besides Japan’s economic situation. Specifically, he called attention to geopolitical developments.
Notably, markets responded positively earlier in the week when reports hinted at progress in Russia–Ukraine peace talks. However, the optimism collapsed when Russian President Vladimir Putin delivered new warnings and insisted that Moscow would seize territory.
Demanincor said official statements from U.S. and global officials clearly showed that negotiations remained difficult, despite upbeat headlines circulating on social media.
He told traders to watch for surprise comments from Japanese officials, tariff-related news tied to U.S. political negotiations, and the run-up to next week’s FOMC meeting.
Markets currently expect a third straight 25-basis-point cut, and traders assign an 87% chance to that outcome. They also project two or three cuts in 2026. Demanincor said Jerome Powell’s guidance will determine whether markets keep pricing in early-2026 easing or start pulling back those expectations.
He argued that even if the Fed cuts rates next week, weaker data could erase hopes for early-2026 cuts and keep pressure on risk assets into the end of the year.
How Low Could XRP Go?
The market pundit then shared the XRP levels he plans to monitor. Specifically, if XRP drops below $1.90, he noted that he may consider adding to his position, depending on whether buyers show interest on order-flow charts. However, if XRP loses that support, investors should watch $1.56 as the next accumulation zone.
On the upside, Demanincor noted that he would not expect a recovery until XRP flips $2.33 into support because he identifies a strong seller at that level. If XRP breaks through $2.33, he plans to turn bullish again and watch for a move toward $2.63.
He also noted a lower delta zone between $0.73 and $0.81, which would only come into play under extreme selling pressure, and he highlighted $3.28 as the next major sell zone above.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
