The cryptocurrency market faced a sharp downturn today, with Bitcoin plunging 4% to $82,176 and extending its weekly losses to 11%. The broader market shed 7% in value, dragging major altcoins like Ethereum (ETH), Solana (SOL), and XRP down by 7–9%. This widespread sell-off stems from escalating U.S.-China trade tensions, regulatory uncertainty, and a staggering $616 million in liquidations—primarily from leveraged long positions.
Amid this turbulence, XRP has been one of the more noticeably struggling assets. Once riding high after reaching an all-time peak of $3.40 on January 16, the token has now slipped to $2.18, marking a steep 35% decline over just two months. As investor sentiment cools and new demand dries up, XRP faces mounting challenges on both technical and fundamental fronts.
XRP’s Decline Deepens: What’s Driving the Drop?
The recent price action reflects more than just market-wide panic—it highlights structural weaknesses in XRP’s current holder base. On-chain analytics reveal that the supply of XRP held in profit has shrunk by 6.39 billion tokens in just one week, the lowest level recorded this year. This means a growing number of investors are now sitting on unrealized losses, increasing the likelihood of further sell-offs.
When large portions of an asset’s circulating supply move into loss territory, it often triggers a psychological shift among holders. Fear and uncertainty rise, leading to capitulation during market dips. With fewer investors in profit, there’s less incentive to hold through volatility—and more motivation to exit at breakeven levels. This dynamic amplifies downward pressure and makes meaningful recoveries harder to achieve without strong external catalysts.
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Weak Demand Signals Trouble Ahead for XRP
One of the most concerning indicators for XRP’s future performance is the collapse in new wallet creation. According to Santiment data, only 4,516 new addresses were created on a single recent day to trade XRP—the lowest daily count so far this year. This metric is a key proxy for new investor interest and organic demand.
A shrinking influx of new participants suggests declining confidence in XRP’s near-term prospects. Without fresh capital entering the ecosystem, trading volume stagnates, liquidity thins, and price volatility increases. Historically, sustained periods of low onboarding have preceded extended bearish phases across various cryptocurrencies.
Moreover, low wallet growth implies that current price levels aren’t attractive enough to pull in new buyers—even during broader market rallies. Until this trend reverses, XRP may remain trapped in a feedback loop: falling prices deter new investors, which reduces demand, which pushes prices lower still.
Broader Market Pressures Weigh on Altcoins
XRP isn’t suffering in isolation. Macroeconomic forces are contributing heavily to the current crypto downturn. Michael Wilson, chief strategist at Morgan Stanley, recently projected a potential 5% drop in the S&P 500 during the first half of the year. Such equity market weakness typically spills over into risk-on assets like altcoins.
Additionally, geopolitical and economic commentary from U.S. officials has added to the uncertainty. Former President Trump’s remarks about blocking taxpayer funds from purchasing altcoins—and Treasury Secretary Scott Bessent’s warnings of short-term economic disruptions—have fueled regulatory fears across the digital asset space.
These developments tighten overall liquidity conditions and make investors more risk-averse. In such environments, speculative assets like XRP often see disproportionate outflows compared to larger-cap cryptos such as Bitcoin or Ethereum.
Technical Outlook: Can XRP Rebound?
From a technical perspective, XRP remains in a clear downtrend. Since peaking at $3.40, price action has consistently formed **lower highs**, with each attempted rally failing beneath a descending trendline resistance. Currently trading around $2.17, the token is approaching critical support near $1.47.
If selling pressure continues and buyer interest remains weak, a breakdown below $2.00 could accelerate losses toward that support zone. Conversely, a sustained move above the descending trendline would signal renewed bullish momentum and potentially open the path toward **$2.93**, the next major resistance level.
However, given the current lack of demand and negative market structure, any rebound attempts are likely to be short-lived unless backed by strong volume and improved sentiment.
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Frequently Asked Questions (FAQ)
Why is XRP dropping in price?
XRP is declining due to weakening investor demand, increased selling pressure from holders in loss positions, and broader crypto market selloffs driven by macroeconomic uncertainty and leveraged liquidations.
Is now a good time to buy XRP?
While XRP is nearing key support levels, current indicators—such as low wallet growth and bearish technical patterns—suggest caution. Investors may want to wait for clearer signs of demand recovery before entering positions.
What does on-chain data say about XRP?
On-chain metrics show a significant contraction in supply held in profit—down by 6.39 billion tokens in one week—indicating growing unrealized losses and rising risk of further downside.
How low could XRP go?
If bearish momentum persists, XRP could test support around $1.47. A break below $2.00 may accelerate downward movement toward that level.
Could XRP recover in the future?
Long-term recovery depends on renewed investor confidence, increased adoption via Ripple’s ecosystem developments, and improved overall market conditions. A breakout above $2.93 could signal a shift in trend.
What are the key resistance levels for XRP?
The immediate resistance lies along the descending trendline above $2.30. A confirmed breakout could target $2.93, with further upside potential if momentum builds.
Final Thoughts: A Test of Resilience
XRP stands at a pivotal juncture. With new demand at a yearly low and technical indicators pointing southward, the path to recovery looks steep. The combination of fading investor interest, macro headwinds, and internal market structure weaknesses paints a challenging picture for near-term performance.
Yet history shows that even deeply oversold assets can rebound when catalysts emerge—whether regulatory clarity, product advancements from Ripple Labs, or broader market stabilization. For now, patience and vigilance are key.
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While bears maintain control, traders and long-term holders alike should monitor wallet growth trends, on-chain profit metrics, and broader macro developments closely. The next few weeks could determine whether XRP stabilizes—or enters a deeper correction phase.