XRP Faces 25% Drop Risk as ETF Outflows and Weak Demand Raise Pressure

XRP is currently trading in a high-risk technical zone, with price sitting dangerously close to a major support level. At around $1.89, the asset is only marginally above a breakdown threshold, and while the chart may appear calm on the surface, deeper signals suggest downside pressure is quietly building.

What makes this situation particularly notable is not just XRP’s proximity to support, but the fact that a recent bullish technical signal failed to trigger any meaningful recovery. In many cases, such signals provide at least short-term relief rallies. This time, XRP barely moved — and that lack of response is where the warning signs intensify.

Between December 31 and January 20, XRP formed a hidden bullish divergence on the daily chart. Price printed higher lows, while the Relative Strength Index (RSI) registered lower levels. Traditionally, this pattern indicates weakening selling pressure and the potential return of buyers. However, XRP did not follow through. Momentum remained muted, and price stalled instead of bouncing.

This failed divergence suggests that while sellers may have slowed down, buyers are not stepping in with conviction. In weak market environments, bullish signals that produce no reaction often reflect demand exhaustion rather than strength.

From a structural perspective, XRP continues to trade within a rising wedge formation, which typically carries bearish implications. If price closes below the $1.85–$1.86 zone, the wedge support would break, opening the door for a deeper correction. Downside targets include the $1.70 region initially, with a potential extension toward $1.42 — representing roughly a 25% decline.

Beyond technicals, capital flows are reinforcing the bearish narrative. For the first time in weeks, XRP-linked ETF products recorded net outflows. In the week ending January 23, approximately $40.5 million exited these funds, signaling that institutional demand may be cooling.

On-chain data paints a similar picture. Metrics tracking long-term holder accumulation have flattened and begun to decline slightly. Rather than aggressively adding during weakness, holders appear hesitant, confirming that demand is not strengthening beneath the surface.

Meanwhile, whale activity is adding further pressure. Wallets holding between 10 million and 100 million XRP have reduced their exposure, unloading roughly 90 million XRP, equivalent to around $170 million in distribution. This selling helps explain why XRP failed to rally despite bullish divergence — supply is being absorbed, but not overcome.

In summary, XRP is entering a critical phase where selling pressure remains present, buyers are absent, ETF demand is weakening, and whales are distributing. Unless the asset reclaims resistance near $1.98, the market remains tilted toward downside risk, with support levels now under serious threat.