XRP Price Prediction: Yen Arbitrage Close Position May Drag XRP Towards the Abyss of $1.82

On December 1, XRP plummeted to a low of $2.05 along with the market, and analysts warned that it may further dip to the support level of $1.82 in the next 1 to 4 weeks. The core downside risk stems from the Fed's interest rate cut and the expected interest rate hike by the Bank of Japan, which triggered the close position of yen arbitrage trades. At the same time, XRP Spot ETF has only seen a weak inflow of $666.6 million since its launch, far below market expectations. Although the short-term outlook is bearish, the legislative progress of the US market structure bill and potential favourable information from regulators provide hopes for a rebound in its medium-term trend over the next 4 to 8 weeks.

Macro Storm Eye: How Will Yen Arbitrage Close Position Impact XRP?

XRP's big dump on the first day of December is not merely an internal adjustment of the cryptocurrency market, but rather it is caught in the “eye of a storm” caused by changes in global macroeconomic and monetary policy expectations. The core transmission chain lies in the market's warming expectations for a Fed rate cut in December, while the Bank of Japan has released strong signals for a rate hike this month, leading to a decline in the USD/JPY exchange rate and a narrowing of the US-Japan interest rate differential. For the financial market, this significantly increases the risk of forced Close Position in “yen arbitrage trading.”

Understanding “Yen Arbitrage Trading” is crucial. This is a classic international arbitrage strategy where investors borrow the extremely low-interest yen, convert it into US dollars or other high-yield currencies, and then invest in high-return risk assets such as US Treasury bonds, tech stocks, or Bitcoin to earn the interest rate differential. Once the yen interest rate rises (or is expected to rise) while the US dollar interest rate falls (or is expected to fall), the profit margin of this trade will sharply contract or even turn into a loss, triggering a chain reaction of investors selling risk assets and buying back yen to repay debts, known as “Close Position.”

History provides a clear mirror. In July 2024, the Bank of Japan adjusted its policy, and the Fed shifted to dovish expectations, triggering a wave of intense yen arbitrage Close Position. At that time, the USD/JPY exchange rate fell sharply from 161.951 to 139.576, while Bitcoin plunged from nearly $70,000 to around $49,000. Currently, as the Fed ends quantitative tightening, concerns arise that the script of July 2024 may repeat itself, especially if interest rate cuts are combined with rate hikes from the Bank of Japan. Cryptocurrencies, as representatives of high-risk assets, particularly XRP, which is closely linked to cross-border payments and traditional finance, are the first to bear the selling pressure.

Current Market Key Resistance Data Overview

• XRP current price: 2.0834 USD (December 1 morning session, intraday fall 3.35%)
• Current Bitcoin Price: $87,337 (dipped 3.39% intraday, dragging down the market)
• USD/JPY: 155.666 (weakening, indicating narrowing interest rate differentials and Close Position risk)
• Japanese Stock Performance: The Nikkei 225 index fell 1.23% in early trading, indicating risk aversion.
• Historical Reference: In July 2024, under a similar macro environment, BTC retraced over 29% from its peak.

Structural Weakness: Spot ETF “Cools Down” Exposing Insufficient Institutional Interest

In addition to macro headwinds, XRP itself also faces severe structural challenges, the most prominent being the disappointing funding performance of its spot ETF products. Since being approved for listing, the total net inflow of all XRP spot ETFs has only been $666.6 million. This figure is not only far from the surge of funds seen in the early days of Bitcoin spot ETF listings but also well below the market's optimistic expectations for “suppressed institutional demand,” which has directly led to a cooling of market sentiment.

In-depth analysis of the performance of various ETF issuers reveals a clearer situation. The XRPZ ETF under Franklin Templeton, as a product of the world's 19th largest ETF issuer, has attracted only $85.22 million in funds since its launch, which can only be described as dismal. In contrast, the canary XRPC ETF, which enjoys the “first mover” advantage, leads with a total inflow of $343.67 million, but its $243.05 million in funds came on the first day of listing, after which the inflow momentum has clearly slowed. This indicates that after the brief “novelty effect,” XRP has failed to sustain deep institutional allocation of funds.

The weakness of this capital inflow reflects institutional investors' cautious attitude towards XRP as an asset class. Unlike Bitcoin's “digital gold” narrative or Ethereum's “world computer” ecosystem narrative, XRP's value story heavily relies on Ripple's business progress in the cross-border payment sector, regulatory clarity, and whether it can be widely adopted as a reserve asset for enterprises. Currently, in the absence of breakthrough progress in these key areas, institutions tend to take a wait-and-see approach rather than making large bets.

Potential Turning Point: Can the Market Structure Bill Become a “Lifeline”?

Despite being shrouded in clouds in the short term, the mid-term outlook for XRP is not entirely bleak, with its biggest potential Favourable Information coming from legislative progress at the U.S. regulatory level. The highly anticipated “Market Structure Bill” is regaining momentum. Industry news suggests that bipartisan senators are preparing for a possible “mark-up” (revision review) of the bill during the week of December 8, which is seen as a key step forward in the legislative process.

Looking back at history, the impact of regulatory trends on XRP prices is immediate. On July 17, 2024, under the stimulation of news that the bill was passed in the House of Representatives and submitted to the Senate, XRP surged 14.69% in a single day. The core objective of the bill is to provide a clear regulatory framework for digital assets. If it is ultimately passed by the Senate and signed by the President, it will greatly eliminate the policy uncertainties faced by institutional investors and clear obstacles for broader capital entry, which is particularly favorable for long-standing assets like XRP that are under “securities” controversy.

Therefore, the medium-term trend over the next 4 to 8 weeks will largely be tied to the fate of this bill in Congress. Any positive progress could quickly reverse market sentiment and provide strong rebound momentum for XRP. The market generally expects that if the bill advances smoothly, XRP is likely to challenge its historical high of $3.66 set in July 2024. Conversely, if the legislative process stalls again or encounters significant setbacks, it will become another heavy burden that weighs down the market.

Technical Analysis and Trading Strategy: Key Support and Bull-Bear Battlegrounds

From a purely technical analysis perspective, the chart structure of XRP is also bearish. After falling 2.08% on November 30, the price of XRP has clearly deviated from the 50-day and 200-day Exponential Moving Averages (EMA), which are currently positioned at $2.3383 and $2.5071 respectively, creating significant resistance above. This arrangement of moving averages confirms the continuation of the short-term downward trend, and technical analysts generally view this as a strengthening signal of “bearish bias.”

(Source: TradingView)

For traders, it is crucial to closely monitor several key price levels. On the downside, the primary psychological support level is the $2.0 integer mark. Once this level is effectively broken (for example, a daily closing price confirming below $2.0), the next support level will point to $1.9112, while the ultimate stronghold is the November low of $1.8239. For traders holding long positions in XRP, setting a stop loss below $1.8239 is a rational choice for risk management.

In the upward direction, any meaningful rebound needs to first overcome the immediate resistance around 2.2 dollars, and then challenge the aforementioned moving average resistance band (2.3383 - 2.5071 dollars). A stronger increase requires reclaiming previous highs at 2.62 dollars and 2.8 dollars, and ultimately confirming the return of a long-term bull market with a volume breakout above the historical highs of 3.0 dollars and 3.66 dollars. Achieving such a reversal in the current macro and fundamental environment requires extremely strong catalysts.

Risk Matrix: Comprehensive Simulation of Downward and Upward Scenarios

Overall, XRP is at a crossroads determined by multiple variables, and the future path depends on a complex “risk matrix.” Downside risk scenarios include: 1) Large-scale close positions in yen arbitrage trading leading to a global sell-off of risk assets; 2) Net outflows of funds from the XRP spot ETF; 3) The U.S. Senate postponing or rejecting the market structure bill; 4) Morgan Stanley Capital International deciding to remove Digital Asset Treasury Companies (DATs) from the index, weakening XRP's narrative as a corporate reserve asset; 5) The U.S. Office of the Comptroller of the Currency rejecting Ripple's bank charter application.

Conversely, the upward opportunity scenario could be triggered by the following events: 1) BlackRock announces the launch of the iShares XRP Trust, signaling strong institutional demand; 2) the Fed cuts interest rates in December and hints at further easing in the first quarter of 2026; 3) the market structure bill passes in the Senate; 4) more blue-chip companies announce they will include XRP on their balance sheets as a reserve asset; 5) Morgan Stanley Capital International maintains the listing for DATs. Any one of these scenarios materializing could become the catalyst for XRP to challenge new highs.

For investors, it is not advisable to make big bets based on a single narrative, but rather to maintain flexibility and closely monitor the dynamic changes of the aforementioned core driving factors. Short-term (1-4 weeks) strategies should focus on risk control, being vigilant about a dip to the support level of $1.82; for the medium term (4-8 weeks), actively pay attention to signals of regulatory legislation and macro policy shifts, preparing for potential trend reversals. During periods of increased volatility, position management and pre-established response plans are more important than predicting precise points.