XRP (XRP -5.69%) is getting hit with another round of sell-offs Tuesday. As of 12:30 p.m. ET, the cryptocurrency's token price share price had fallen 3% over the previous 24 hours of trading. Over the same stretch, Bitcoin was down 1.5%, and Ethereum was down 0.5%.
The cryptocurrency market is seeing a wave of bearish trading as investors react to rising geopolitical risk factors. Relations between the U.S. and China are taking another turn for the worse, and investors are responding by moving out of risk-heavy investments.
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The U.S.-China dynamic is weighing on XRP
China announced last week that it would be further limiting the export of its rare-earth minerals to the U.S. and other foreign purchasers. The Trump administration responded by announcing a new 100% tariff on Chinese goods. The two countries have subsequently announced additional retaliatory actions in the latest leg of the mounting trade war.
While these dynamics might not seem like catalysts that have an immediate impact on XRP's fundamentals, they are broadly causing investors to become more risk averse.
What's next for XRP?
The solidification of a new trade agreement between the U.S. and China could be a substantial bullish catalyst for XRP and other cryptocurrencies, but it remains to be seen whether the two competing powers will be able to arrive at mutually agreeable terms. There is a significant risk for XRP investors in the near term that relations between the two countries will continue to become increasingly adversarial.
While cryptocurrencies have sometimes been championed as defensive alternatives to stocks and other traditional investment vehicles, the crypto market has come to trade closer in line with equities markets, as they have achieved greater adoption and integration with the financial system. For better or worse, geopolitical and macroeconomic dynamics will likely be the most important pricing catalysts for XRP through the remainder of the year.
