Elsa Ohlen

XRP, Bitcoin and other cryptos were falling early Monday, suffering from fears that the monetary easing cycle may not continue at pace this year.

The price of the world's largest digital coin, Bitcoin, is down 3.5% over the past 24 hours to last trade at $91,881.

XRP, another popular cryptocurrency which is used to settle transactions on Ripple's payment platform, fell 3.4% to $2.44. Yet, the smaller crypto rose over the weekend, hitting $2.60 on Saturday, possibly linked to expected news from the Securities and Exchange Commission.

The SEC sued Ripple in 2020, saying that by selling XRP the company was selling an unregistered security. In August 2024, a court ordered Ripple to pay a $125 million fine for violating investor-protection laws, less than the $2 billion sought by the regulator. Ripple CEO Brad Garlinghouse celebrated the decision at the time as a "victory for Ripple." The SEC appealed the decision in October and has until Jan. 15 to submit arguments in support of its appeal.

On Friday, cryptocurrencies were hit by a hotter-than-expected U.S. jobs report. As crypto prices tend to fall when the prospect of higher interest rates increases, and the jobs report fueled investor fears that the Federal Reserve may keep rates higher for longer, crypto investors felt the pressure.

"The cutting cycle is over," BofA analysts wrote Friday after the December jobs numbers.

The next Federal Open Market Committee (FOMC) meeting takes place over Jan. 28-29 and investors are increasingly confident the central bank will hold interest rates steady. The odds of no rate cuts at all this year are at about 33%, according to the CME FedWatch tool.

Goldman Sachs is slightly more optimistic. The broker changed its forecast for interest rate cuts on Saturday, and now expects two cuts in 2025, and one in 2026. That's down a previous forecast of three cuts in 2025 to an unchanged terminal rate of 3.5%-3.75%.

Goldman's forecast, slightly more dovish than the rest of the market, is due to the belief that underlying inflation trends will continue to fall toward 2%, analysts led by Jan Hatzius wrote.

While crypto investors have cheered president-elect Donald Trump's pro-crypto stance, some worry that Trump tariffs, if implemented, will inflate prices, and prevent the Fed from lowering interest rates as quickly as previously expected.

However "implications of the new administration's policies for interest rates are not as strongly and unambiguously hawkish as widely assumed," Hatzius says. "We find it hard to envision tariffs that raise inflation enough to make a plausible case for hiking that do not also unsettle the equity market."

Among other cryptocurrencies, Ether is down 7.8% over the past 24 hours, while Solana is down 8% and Dogecoin 5.3% lower.

Write to Elsa Ohlen at elsa.ohlen@barrons.com

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January 13, 2025 10:49 ET (15:49 GMT)

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