Introduction
Ripple’s XRP is trading at a critical juncture, with its short-term trajectory hinging on a decisive move around the $2.26 price level. Technical analysts warn that failure to break this resistance could trigger a significant correction, potentially sending the token toward $1.65 or lower. This near-term caution, however, contrasts sharply with a backdrop of robust institutional inflows, declining exchange supply, and Ripple’s steady regulatory progress in the European Union, painting a complex picture for the cross-border payment token.
Key Points
- XRP is forming an A-B-C corrective pattern, with Wave C targeting the $2.26 resistance—a break above $2.41 would invalidate the bearish setup.
- Ripple is advancing its EU regulatory strategy with an e-money license in Luxembourg and a MiCA application, aiming to expand regulated cross-border payments.
- XRP ETFs recorded over $10 million in net inflows recently, and exchange supply has dropped below 2 billion tokens, reducing sell-side pressure.
The Technical Crucible: A-B-C Pattern Points to $2.26
According to the technical analysis highlighted by crypto analyst CasiTrades, XRP is currently tracing what appears to be a textbook A-B-C corrective pattern. This structure suggests the asset is in a Wave 2 correction within a larger trend. The analysis pinpoints the $2.26 area—specifically the 0.618 Fibonacci retracement level—as the key resistance zone for the developing Wave C. A clean rejection at this level would signal the potential start of a move lower, with immediate supports at $2.11 and $2.03. The projected target for a subsequent Wave 3 decline is set at $1.65.
CasiTrades provides a critical invalidation point for this bearish setup: any move that creates a new local high above $2.41 would break the pattern. At the time of reporting, XRP was trading at $2.10, having fallen 2% over 24 hours. The Relative Strength Index (RSI) reading near 61 indicates there is room for further price movement before the asset is considered overbought, leaving the door open for a test of the crucial $2.26 level. With 24-hour volume exceeding $4 billion, trader focus is intensely fixed on how the price reacts at this technical threshold.
Analyst Warnings and Potential Downside Scenarios
The caution is echoed by other market observers. Analyst EGRAG CRYPTO has outlined more severe potential drawdowns based on historical cycle structures, suggesting XRP could still experience corrections of approximately 31% or 47%. These projections would place possible low targets in the $1.40 to $1.20 range, representing a significant decline from current levels. Adding to the short-term technical concerns, a separate weekly chart analysis from Ali Martinez has recently flashed a sell signal, following a prolonged buy signal earlier in the year.
Despite these warnings, EGRAG CRYPTO notably qualifies the outlook, stating, “Long term, nothing is bearish in XRP’s fundamentals or structure.” This distinction underscores a market narrative where near-term technical headwinds are weighed against longer-term fundamental developments, creating a tension that is defining current trader sentiment.
The Bullish Counter-Narrative: Regulation, ETFs, and Supply Shock
Contrasting the technical warnings is a series of positive fundamental developments. On the regulatory front, Ripple is making concrete strides in the European Union, a key market for its cross-border payment solutions. The company has received preliminary approval for an e-money institution (EMI) license in Luxembourg and is concurrently applying for a Crypto Asset Service Provider (CASP) license under the EU’s forthcoming Markets in Crypto-Assets (MiCA) framework. This strategic regulatory push is aimed at expanding Ripple’s capacity to offer regulated payment services across the European Economic Area.
Simultaneously, institutional interest appears robust. Exchange-traded funds (ETFs) tied to XRP recorded net inflows of over $10 million on January 14 alone, bringing total inflows to approximately $1.26 billion according to data from SoSoValue. Perhaps more critically, on-chain data reveals a substantial reduction in readily sellable supply. The amount of XRP held on exchanges has dropped below 2 billion tokens, a sharp decline from over 4 billion in late 2025. This depletion of exchange reserves reduces potential sell-side pressure and can be interpreted as a sign of accumulation, providing a fundamental pillar for long-term price support.
📎 Related coverage from: cryptopotato.com
