XRP Faces Critical Test as Key Price Threshold Breached

The opening weeks of 2026 have presented a significant challenge for XRP, with its price action coming under intense selling pressure. A pivotal development has been the asset's decline below the psychologically significant $2.00 level, a move that market technicians interpret as confirming a near-term bearish structure. This technical breakdown, however, stands in stark contrast to a series of robust fundamental indicators, creating a notable divergence that is capturing market attention.

Contrary to the downward price trajectory, institutional investment vehicles tied to XRP continue to attract capital. XRP-focused exchange-traded funds (ETFs) are reporting consistent inflows, ranking them among the fastest-growing crypto ETFs behind Bitcoin. Notably, these inflows have persisted even during the recent period of price depreciation, suggesting large-scale investors are adopting a counter-cyclical strategy. This institutional confidence is further bolstered by regulatory advancements, with Ripple securing pivotal operational licenses in both the United Kingdom and Luxembourg, thereby strengthening its institutional framework.

On-Chain Activity and Supply Dynamics Signal Strength

Beneath the surface of price charts, network data tells a more optimistic story. Mid-January saw the XRP Ledger process 1.45 million transactions in a single day—the highest volume recorded in six months. This surge in usage is linked to the activation of new payment corridors and the growing integration of stablecoins on the network.

Simultaneously, a pronounced supply squeeze is underway. The amount of XRP held on centralized exchanges has plummeted to its lowest level since 2018. Such a sustained outflow from trading venues is widely viewed as a signal that holders are moving assets into long-term custody, or "cold storage," indicating a lack of intent to sell in the immediate future.

Should investors sell immediately? Or is it worth buying XRP?

Technical Picture Paints a Cautious Short-Term Outlook

From a chart perspective, the failure to maintain footing above $2.00 is a clear setback. The attempted breakout lost momentum, allowing sellers to seize control and drive the price lower on elevated volume, which subsequently triggered a wave of liquidations for leveraged long positions.

Trading at approximately $1.92, XRP has moved decisively away from that critical level. Market analysts note that the $2.00 zone, once a support area, has now transformed into a formidable resistance ceiling, capping any recovery attempts. The persistence of the current downtrend is underscored by a pattern of losses in 13 out of the last 14 trading sessions. The Relative Strength Index (RSI) reading of 28.8 places the asset in technically oversold territory.

Conclusion: A Battle Between Technicals and Fundamentals

XRP currently embodies a classic market divergence. The short-term technical outlook is dominated by bearish sentiment following the breach of the $2.00 mark and the deeply oversold RSI condition. Fundamentally, however, record on-chain transaction counts and rapidly depleting exchange reserves suggest a phase of accumulation is occurring behind the scenes. For the bulls to regain control, a sustained recovery and hold above the $2.00 threshold is essential. Should this fail, analysts warn that the next significant support zone near $1.80 could come into focus.