The XRP price is teetering on the brink of a sharp drop. The rate is just 1% above key support at $1.89, and buyers are still not responding. At first glance, the chart looks stable, but warning signals are building beneath the surface. It is the lack of a decisive defense of this level that analysts consider a 'red flag' that could precede a violent move.
XRP recently printed a bullish signal that usually leads to at least a short-term bounce. This time it barely moved. This failure is a real warning.
The hidden bullish divergence failed.
Between December 31 and January 20, the price of XRP formed a hidden bullish divergence on the daily chart. The price reached a higher low while the Relative Strength Index (RSI) printed a lower low.
Hidden bullish divergence usually signals that selling pressure is weakening and that buyers may soon regain control. This does not guarantee a rally and trend reversal, but it often leads to a bounce or at least a corrective upward period.
In this case, it did not happen. After the divergence appeared, the XRP price barely moved up. The price got stuck at a standstill, and momentum never increased. This tells us something important. Sellers may have slowed down, but buyers did not step in to replace them.
This type of divergence failure often occurs in weak markets. It shows hesitation, not strength. When a bullish signal fails, it usually indicates a lack of demand, not that the signal was wrong.
Additionally, the rising wedge structure of XRP still indicates a potential downward move of 25% if support is broken. With buyers absent and sellers slowly regaining control, XRP is approaching a point where even a small downward move could trigger a significantly sharper move.
Moreover, if buyers do not appear after the selling pressure weakens, what will happen when sellers return?
ETF flows and holder data confirm the weakening demand for XRP.
The response starts with capital flows. For the first time in weeks, XRP-related ETF products recorded net outflows. In the week ending January 23, the total outflow was about 40.5 million USD. This followed a long period of steady inflows, marking a distinct change in institutional capital behavior.
ETF flows matter because they reflect significant, directional movements of millions of dollars. When inflows stop and turn negative, it usually means that institutional demand is faltering.
Meanwhile, on-chain data tells a similar story. The Hodler Net Position Change metric for XRP, tracking the monthly change in long-term holders' balances, has flattened and begun to decline. On January 20, long-term holders controlled about 232.1 million XRP. By January 24, this number had dropped to about 231.55 million XRP.
This is not aggressive selling, but it is not accumulation either. After the divergence appeared, long-term holders did not add significant funds. This confirms what the price action had already suggested. Buyers were not confident enough to engage.
When demand for ETFs stops, and long-term holders do not engage at the same time, bounces tend to struggle.
Whale selling maintains the risk of a price collapse for XRP.
While buyers hesitated, one group acted. Wallets holding between 10 to 100 million XRP began to reduce their exposure. On January 18, this cohort held about 11.16 million coins. By the last reading, their balance had dropped to around 11.07 million coins.
This represents a reduction of about 90 million tokens. At the current price of XRP, this means a distribution worth around 170 million USD.
This selling pressure also helps explain why XRP did not react to the hidden bullish divergence. It also explains why the price remains near support. From a technical standpoint, the risk is now clear.
A daily close below the 1.85-1.86 USD level would break the wedge support and activate the downside target. This opens the way first to the 1.70 USD level and then to a deeper move toward 1.42 USD if selling momentum accelerates. This would bring the altcoin's downward move close to 25% from the breaking point.
On the other hand, XRP must reclaim the 1.98 USD level to weaken bearish pressure. This would provide short-term relief, but without renewed buyer participation, it is likely to remain just a shallow bounce rather than a trend change. Currently, the imbalance is evident. Selling exists. Buyers are absent for now.
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