Volatility concerns are growing across the broader crypto market, including XRP, ahead of the Bank of Japan's October monetary policy meeting.

On Oct. 26, blockchain media outlet The Crypto Basic reported that markets see a high chance the BOJ will keep its benchmark rate unchanged at its Oct. 29-30 meeting. If it delivers a hawkish message signalling further increases ahead, selling pressure could rise across risk assets, including XRP.

The market is currently pricing in about a 96 percent chance the BOJ will keep the policy rate at 1.25 percent. The BOJ raised rates by 25 basis points at its September meeting just 5 weeks ago, adding weight to the view it will assess the impact of that move this time. Some forecasts also point to all 9 policy board members supporting a hold if the outlook plays out. But markets are focusing more on the wording of the policy statement and any changes in the inflation outlook than on the rate decision itself.

Japan's September consumer price index was 2.1 percent, above the BOJ's 2 percent target. If the BOJ concludes in its October quarterly outlook report that underlying inflation has reached or exceeded the target level, expectations for an additional hike in December could rise again. Some in the market also see a possibility that, if economic conditions support it, a further 25-basis-point increase to 1.50 percent could be considered at the Dec. 17-18 meeting.

The direction of the yen carry trade is another variable. The yen carry trade is a strategy of borrowing yen at low interest rates and investing in assets expected to deliver higher returns, and it has included cryptocurrencies such as bitcoin and XRP. But as Japan tightens policy, higher borrowing costs have increased the burden of maintaining such trades. If that is compounded by a stronger yen, investors may reduce their exposure to risk assets.

In fact, since March 2024, BOJ rate hikes have all appeared ahead of declines in bitcoin. In August 2024, an unexpected rate increase was followed by carry-trade unwinding, and bitcoin fell to $49,000 from about $64,000 in 48 hours.

XRP is already in a weakening trend. XRP rose to $1.56 on Oct. 2, but slid to an intramonth low of $1.255 on Oct. 18. It is currently trading around $1.27, down about 14.5 percent so far in October alone. That is a steeper decline than bitcoin's 4.4 percent drop over the same period. Its year-to-date loss is also nearing 30 percent.

Technical indicators are also a drag. Charts show a double-top pattern, and the moving average convergence divergence, or MACD, is pointing to a sell signal. On-chain analyst Ali Martinez (알리 마르티네즈) flagged $1.26 as a key support level and warned that XRP could be pushed down to $0.98 if selling by whale investors continues.

This week's U.S. Federal Open Market Committee meeting is another variable. The FOMC holds its meeting on Oct. 28, two days before the BOJ decision. With the two central bank meetings overlapping, investors' risk appetite could be shaken and price swings could widen across the crypto market. XRP in particular is already facing a weak trend and technical headwinds, and selling pressure could intensify if the BOJ signals tighter policy than expected.