Shares of XRP (XRP -0.23%) are tumbling on Tuesday. The cryptocurrency lost 4.7% as of 3:20 p.m. ET and was down as much as 5.2% earlier in the day. The decline comes as the S&P 500 (^GSPC -0.03%) and Nasdaq Composite (^IXIC 0.13%) also posted losses amid growing economic concerns.
The third-largest cryptocurrency by market cap is feeling pressure, as a new survey released Tuesday shows rising anxiety on Wall Street.
Recession fears are driving risk-off sentiment
A new CNBC Fed Survey shows the top fund managers, strategists, and analysts around Wall Street are growing more concerned a recession is incoming. The poll revealed that financial experts have raised the probability of a U.S. recession in the next year to 36% from 23% in January, reaching the highest level in six months. The GDP forecast for 2025 dropped from its previous estimate of 2.4% growth to 1.7% growth.
As recession concerns mount, investors appear to be rotating capital away from higher-risk investments like XRP and toward safer assets like Treasury bonds and defensive stocks.
XRP has a valuation problem
I've argued for some time now that while XRP has a clear use case -- unique in a crypto market flooded with meme coins -- its market capitalization is out of step with the actual value it provides. Even after the drop, XRP has a massive market capitalization of $130 billion. I'm not convinced that the market for XRP's border-bridging technology is large enough to justify that valuation, even if it became the dominant player in the space.
