NEW YORK, June 18, 2026, 08:47 EDT - XRP tumbled through the key $1.20 support level on Thursday, trading around $1.17, as a hawkish Federal Reserve policy shift strengthened the U.S. dollar and triggered broad selling across risk assets. The token, which fluctuated between $1.16 and $1.22, suffered a decline of roughly 2.5% from its previous close, marking a notable underperformance relative to larger cryptocurrencies like Bitcoin and Ether.
Fed's Hawkish Surprise Sparks Sell-Off
The catalyst came from Washington, where the Federal Reserve kept its benchmark interest rate steady at 3.50%-3.75% but delivered a more aggressive inflation outlook. Nine Fed officials now anticipate at least one rate hike in 2026, while the central bank raised its year-end inflation forecast to 3.6% from 2.7%. This hawkish tilt sent the U.S. dollar surging against major currencies, with the Dollar Index climbing above 100.60, putting pressure on non-yielding assets like cryptocurrencies.
"This Fed decision was short, but not sweet," said Karl Schamotta, chief market strategist at Corpay. The shift in policy communication has become a new source of volatility, as Fed Chair Kevin Warsh has moved away from the forward guidance that investors previously relied upon. "He's hot out of the gate, and he's putting his thumbprint on everything Fed-related," noted Michael Reynolds, vice president of investment strategy at Glenmede.
Technical Breakdown and Key Levels
The breach of $1.20 is significant, as this level had provided support since XRP bounced from the $1.11-$1.15 zone last week. Intense selling pressure pushed the token below that threshold, though buyers managed to slow the decline around $1.1750. If XRP can reclaim $1.20, it could stabilize the market; however, sustained weakness below $1.1750 could open the door to a retest of $1.15.
Derivatives Data and ETF Inflows
Open interest in XRP futures contracts surged to 2.30 billion tokens, the highest level since October, indicating heightened market activity. However, other derivatives indicators remained bearish, suggesting that leveraged traders may be vulnerable to further downside. Despite the selling pressure, U.S. spot XRP ETFs drew approximately $5.3 million in inflows on June 16, pushing total net inflows to about $1.44 billion. While these inflows provide some support, they have not been sufficient to shield XRP from the broader risk-off move driven by macro factors.
Lagging Behind Peers
XRP's decline was more pronounced than that of its larger counterparts. Bitcoin traded near $64,196, down about 1.1% from its last close, while Ether slipped around 0.3% to $1,747.86. The disparity highlights the extra selling pressure on XRP after it failed to hold above $1.20 following the Fed shock, reflecting investor preference for more established digital assets during periods of uncertainty.
Macro Outlook and Risks
The outlook remains uncertain. Michael Pearce, chief U.S. economist at Oxford Economics, noted that "roughly half the committee are now projecting a rate hike this year," but his firm still expects the Fed's next move to be a cut, as their inflation forecasts are lower than the central bank's. This divergence leaves traders guessing. Higher rate expectations could make interest-bearing bonds more attractive, potentially pushing XRP below $1.15, especially if leveraged traders are forced to unwind bullish positions. Conversely, a weaker inflation reading or a drop in the dollar could trigger short covering, but the Fed's reduced guidance has left the market with less clarity on the path ahead.
For now, macro forces are in control. The rising dollar and hawkish Fed stance continue to weigh on XRP and the broader crypto market, with traders bracing for further volatility as they digest the implications of potential rate hikes later this year.
