Key Points
XRP (CRYPTO: XRP) fell by 22% in the 30-day period ending on June 30, with nothing in the way of bad news to speak of.But that decline may be in its last days, so let’s take a look at what the historical data suggests for XRP’s next move.
June’s bad reputation is well earned
Going back to 2014, June has long been XRP’s worst month for returns, with the median result being a decline of 8.8%. Seven of the last 10 Junes saw the coin lose value, most of the time without any major bearish news breaking. In other words, if history is any guide, there’s no reason for holders to panic about the recent decline.
If June is XRP’s worst month, July is its best, with six of the last 10 Julys closing strongly in the green. The median gain was 10.8%. The strength doesn’t last forever, though, and the bullish window narrows fast after July. August is typically another mildly down month, and there’s no consistent trend of seasonality in September.
Buying the dip could prove to be smart here, but not because of seasonality
Given all that, investors may be tempted to buy the dip in XRP, expecting a decent return in July.
But seasonality patterns in an asset’s price are not a substitute for an investment thesis, and they might not outweigh other, more impactful factors affecting an asset’s price, such as macroeconomic factors, sentiment, or other market phenomena. And those latter elements are very much against cryptocurrencies at the moment. Sentiment is terrible nearly across the board, the market is focused on a face-melting bull market in semiconductor and memory stocks, and the Federal Reserve looks like it’s going to take a hawkish turn to fight inflation, which could reduce the amount of liquidity available for risky investments like XRP.
With that said, there’s an upcoming catalyst that might reward those who load up on XRP right now, and it might coincide with the tail end of the traditionally bullish month of July.
The Clarity Act, a bill that seeks to establish a federal framework for digital asset regulation, cleared the U.S. Senate Banking Committee on May 14 and reached the Senate Legislative Calendar on June 1, leaving the August recess as the practical deadline for passage in 2026. If it clears — and there’s no guarantee it will — the bill would codify XRP’s classification as a commodity, and thereby grant a green light to financial institutions that legally cannot touch unclassified digital assets today. While passage of the bill would be no guarantee of those institutions actually choosing to allocate some of their capital to XRP such that its price increases, the coin, as well as many others, would probably rise in value in anticipation of that happening anyway.
So, if you were already dead-set on buying XRP, there’s a window of elevated opportunity right now to do so, as the Clarity Act could be a major catalyst if it passes, and seasonality could play in your favor. For everyone else, the backdrop is pretty risky right now, and as favorable as the Act’s passage would be, it might not outweigh the headwinds currently at play.
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Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends XRP. The Motley Fool has a disclosure policy.
