1. XRP Coin project introduction and core areas

XRP Coin is a cryptocurrency focusing on cross-border payments and decentralized financial settlement, born around 2011-04-17, running on the public chain XRP Ledger. The project was initially aimed at providing financial institutions and individuals with a fast, low-cost, and scalable international transfer solution, which has significant efficiency advantages compared to traditional bank remittances.XRP Ledger Docs），XRP Coin single transaction fee is only about 0.0002 US dollars, and the confirmation time is only about 3 seconds, supporting 1,500+ TPS, and achieving carbon neutrality.

Over the years, the XRP Coin ecosystem has continued to expand, including reaching cross-border payment cooperation with some financial institutions and exploring decentralized finance (DeFi), NFT, and other fields. However, due to changes in regulatory environment, market sentiment, and speculative behavior, XRP Coin has experienced significant price fluctuations in the past few years, and people often discuss the reasons for ‘why is xrp dropping.’ This article will analyze the logic behind the decline of XRP Coin in combination with the latest market trends, the impact of Trump’s tariffs, and a large amount of derivative clearing data.

Source:XRP Whitepaper

2. XRP Coin Technology Principles and Application Scenarios

2.1 XRP Coin core technology

XRP Coin adopts the “XRP Ledger Consensus Protocol,” a federated consensus mechanism that differs from mainstream proof-of-work (PoW) and proof-of-stake (PoS) models. It enables transaction validation without the need for mining, significantly reducing energy consumption and costs. This consensus method provides high transaction throughput and extremely low fees for financial applications, making XRP Coin inherently well-suited for cross-border payments, rapid clearing, and settlement, as well as other high-concurrency use cases.

2.2 Main Application Scenarios

1. Cross-border payment
   Targeting banks, remittance companies, and individual users, providing more timely and cost-effective solutions for international remittances by reducing intermediate steps and costs.
2. Interbank Settlement
   Some financial institutions have studied or started using XRP Ledger to simplify international transfer processes and optimize liquidity management.
3. Exploring NFT and DeFi
   Although the XRP Ledger is not as popular in the field of decentralized finance as some public chains, there are also projects trying to develop NFT markets, lending protocols, etc., bringing more application prospects for XRP Coin.
4. Ecosystem Expansion
   The improvement of basic infrastructure such as third-party wallets, payment channels, etc., has brought more development, trading, and usage opportunities to the entire XRP Coin community.

2.3 Why is the technical application related to ‘why is XRP dropping’?

Although the XRP Ledger has technical advantages such as high speed and low fees, the market price is not solely determined by technical aspects. Macroeconomic environment, regulatory policies, market sentiment, and sudden events such as tariff changes may lead to the phenomenon of ‘why is xrp dropping.’ In this context, while technology provides long-term support, short-term price fluctuations often depend on broader external factors.

3. The latest market performance and market data: why is XRP dropping?

For investors, the question of “why is XRP dropping” typically involves multiple factors: macroeconomics, industry policies, the project’s progress, and fluctuations in speculative sentiment.

The following are some key indicators displayed on the Gate official website (excerpt from the data on [03/05]):

Note: The above values are approximate, please refer to the real-time data on the Gate platform for accuracy, for reference only.

Source:gate.io spot trading zone

However, if we extend the observation period, XRP Coin has experienced significant short-term fluctuations multiple times in the recent past, such as on March 4, 2025, when the cryptocurrency market showed clear bearish sentiment, and XRP Coin fell by as much as 16% on that day.

Based on the official market data of Gate and some industry information, here are some highlights of March 4, 2025:

XRP Coin 24-hour price drop: about 16%

XRP Coin price range: 2.20~2.64 USDT

XRP Coin trading volume surges: Clearing volume and trading volume have significantly increased compared to the previous few days

Market sentiment: has turned significantly bearish, with many speculators choosing to exit or short

Some analysis points out that the decline on 2025-03-04 is not a unique case for the XRP Coin project. During the same period, various mainstream cryptocurrencies also experienced a 8% to 12% decline, indicating a decrease in overall market risk appetite. Before discussing the specific reasons for ‘why is xrp dropping’, let’s first take a look at an important factor that triggered market panic on March 4th: the official implementation of Trump’s tariffs.

4. Trump Tariff Impact: Exacerbating the new variable of ‘why is XRP dropping’

On March 4, 2025, US President Donald Trump officially imposed tariffs on imported goods from Canada, Mexico, and China, with tariff rates ranging from 10% to 25%. According to multiple media reports, Trump emphasized at a White House press conference that the tariffs on Canada and Mexico would be implemented immediately from that day onwards.

How does the tariff policy affect the cryptocurrency market?

1. Macroeconomic environment tightens
   When tariffs lead to an increase in import and export costs, the risk preference of enterprises and individuals often decreases, and investors will choose more stable assets to hedge, which is not conducive to the cryptocurrency market.
2. Escalate risk aversion
   The increase in uncertainty has caused some investors to withdraw from high-volatility assets, putting further pressure on cryptocurrencies such as XRP Coin.
3. Chain reaction
   Mainstream currencies such as Bitcoin and Ethereum have also generally experienced a 10% to 12% decline. The drop in XRP Coin is even more severe, meaning that under macro bearishness, the market’s bearish sentiment transmission effect has magnified the magnitude of ‘why is xrp dropping’.

4.2 Other cryptocurrencies have also been affected

• BTC: In the past 24 hours, it has dropped from around 93,000 USDT to 83,500 USDT, a decrease of about 10%.
• ETH: The price has dropped by over 12%, currently slightly above 2,000 USDT.
• Solana / Cardano: The declines are close to double digits, significantly suppressed by market risk aversion sentiment.
• Overall cryptocurrency market capitalization: down about 8%, to $2.76 trillion.

From the above data, it can be seen that the chain reaction triggered by the tariff policy is not unique to XRP Coin, but it also exacerbates the degree of “why is xrp dropping”.

5. XRP Coin futures settlement and long-short game

In the XRP Coin downturn on March 4th, the bulls in the derivatives market were hit hard. According to derivative data platforms (such as CoinGlass, etc.), in the past 24 hours:

• XRP Coin Long Liquidation Amount: Over 50 million US dollars
• XRP Coin Short Liquidation Amount: Approximately $8 million

The ratio between the two shows that the impact on the bulls is far greater than that on the bears. When long holders are liquidated, their positions are forced to be sold, further increasing selling pressure.

(Data Source: CoinGlass & Aggregated Market Info)

5.1 Open Interest (OI) declines

According to statistics, the open interest of XRP Coin’s perpetual contracts decreased significantly from around $4.45 billion on March 3, 2025, to $3.34 billion on March 4, 2025, a 25% decrease. The decline in OI often indicates a decrease in investors’ trading interest, especially in leveraged trading, and also suggests that this short-term plunge has squeezed out some speculative funds.

Source:CoinGlass

5.2 Funding Rate Turn Weak

Starting from March 1st, the funding rate of XRP Coin briefly turned positive, but after this recent sharp drop, it dropped from 0.0103% to 0.00032%, indicating a significant weakening of bullish confidence. This also partly explains the accelerated reason for ‘why is xrp dropping’ – bullish stampede exit, bearish momentum increasing selling pressure.

Source:CoinGlass

Summary

XRP Coin has always been known for its core selling points of cross-border payments and high-speed settlements in the global cryptocurrency market, but the recent combination of tariff policies and derivatives clearing data led to a significant drop on March 4th, once again making ‘why is xrp dropping’ a focus of public opinion. From a macro perspective, Trump imposing high tariffs on imported goods from multiple countries has sparked investors’ panic about the tightening economic environment, with cryptocurrencies being the first to bear the brunt as risky assets.

At the micro level, the collective long position of XRP Coin in the futures market has been liquidated, which also means that the short-term speculative force has greatly receded. In technical analysis, $2.20 is seen as a short-term key support. Once broken, it may continue to explore $1.76 and $1.55. However, if there is a subsequent ecological upgrade, the landing of compliance solutions, or a sharp increase in cross-border payment demand, XRP Coin still has the potential to regain its upward momentum and challenge $2.48 and even $3.00.

For investors, rational assessment of potential risks and opportunities, and keeping a close eye on global policies and XRP Coin official developments, are essential to better seize opportunities in market fluctuations.