Ripple's XRP experienced a significant decline on Wednesday as the broader cryptocurrency market turned bearish ahead of the Federal Reserve's upcoming decision. The XRP price fell by over 5%, erasing most of the gains achieved on Tuesday following the launch of Ripple's RLUSD stablecoin.

The sharp drop led to substantial liquidations of bullish positions, amounting to more than $15.19 million. Liquidations occur when exchanges automatically close positions due to insufficient margin. Additionally, short positions worth over $4.6 million were also liquidated, according to data from CoinGlass.

This downturn in Ripple's price was anticipated and occurred just a day after the introduction of the RLUSD stablecoin. As reported by CoinMarketCap, the stablecoin successfully attracted over $53 million in assets, with a 24-hour trading volume exceeding $550,000.

However, RLUSD faces tough competition in a saturated stablecoin market. Tether remains the leading stablecoin with over 60% market share, followed by USD Coin, Ethena USDe, USDS, and Dai. Other notable stablecoins include First Digital USD and Justin Sun’s USDD. Historical trends indicate that even well-known stablecoins often struggle; for instance, PayPal’s PYUSD has a market cap of $447 million despite PayPal's strong presence in fintech, and USDD, launched in 2022, has remained stagnant at $745 million over the past two years.

The decline in XRP’s price may be attributed to profit-taking following the RLUSD launch and investor anxiety regarding the Federal Reserve's final interest rate decision for the year. Economists anticipate a "hawkish cut," with the Fed likely to reduce rates by 0.25% and possibly pause further changes in 2025. Concerns also arise from inflationary policies under President-elect Donald Trump, including deportations and the much-discussed tariffs.

Despite the current downturn, XRP still has potential catalysts on the horizon. The new Securities and Exchange Commission (SEC) may drop its appeal and approve a spot ETF, and Ripple Labs might decide to pursue an initial public offering (IPO), providing further growth opportunities for XRP.