Is XRP on the Brink of a Major Correction?

The XRP market in late August 2025 is teetering on the edge of a potential correction, with technical bearish signals and shifting market psychology creating a volatile environment. Legendary trader Peter Brandt has sounded the alarm, identifying a descending triangle pattern that suggests a breakdown below $2.78 could trigger a sharp decline toward $2.40 and even $1.90 [1]. This critical support level, validated by measured move calculations and on-chain order-book weakness, has become a focal point for traders and investors [2]. Meanwhile, conflicting bullish forecasts—such as XForceGlobal’s $20 cycle target—highlight the tension between short-term bearish momentum and long-term optimism [3].

Technical Bearish Signals: A Breakdown Scenario

Brandt’s analysis hinges on the descending triangle, a classic bearish continuation pattern. The pattern’s lower trendline has acted as a magnet for selling pressure, with XRP recently testing $2.80 after a 6% intraday drop [1]. A confirmed close below $2.78 would invalidate the bullish case, unleashing Fibonacci extensions that project a 61.8% retracement at $2.40 and a 100% target at $1.90 [3]. On-chain data corroborates this bearish bias: exchange inflows have surged, cumulative volume delta remains negative, and whale activity—such as a 30.5 million XRP ($91.4 million) transfer to Coinbase—signals active distribution [4].

However, not all technical indicators are uniformly bearish. XRP remains above the 50-period EMA at $2.95, and a Cup and Handle pattern suggests a breakout above $3.08 could push the price toward $5.85 [5]. This duality underscores the market’s indecision, with the RSI at 36 and MACD divergence hinting at oversold conditions but no clear reversal [6].

On-Chain Distribution and Market Psychology

On-chain metrics reveal a fragile equilibrium. While 91% of XRP’s supply remains in profit—a “profit-taking overhang” that could exacerbate sell-offs—large holders have accumulated 1.2 billion XRP ($3.8 billion) since April 2025, suggesting strategic positioning for a potential breakout [1]. Yet, recent whale activity, including a 50 million XRP transfer from co-founder Chris Larsen, has intensified algorithmic selling pressure [4].

Market psychology further complicates the outlook. The Fear & Greed Index for XRP stands at 38, signaling widespread fear, while the broader crypto market’s index is at 50, indicating neutrality [2]. This divergence reflects XRP’s heightened sensitivity to sentiment shifts, particularly as short-term holders shift from accumulation to distribution mode [6]. A sustained close above $3.00 could reignite bullish momentum, but a breakdown below $2.78 would likely trigger a cascade of stop-loss orders and deepen the correction [1].

Contrasting Bullish Forecasts: Can Optimism Outlast Bearish Momentum?

Despite the bearish technicals, institutional adoption and regulatory developments offer a counter-narrative. Ripple’s On-Demand Liquidity (ODL) service processed $1.3 trillion in Q2 2025, and the SEC’s reclassification of XRP as a commodity unlocked $7.1 billion in liquidity [5]. Prediction markets now assign an 88% probability to spot XRP ETF approval by October 2025, with applications from 21Shares and Grayscale adding to the bullish case [6].

Yet, these long-term catalysts may struggle to offset immediate risks. A breakdown below $2.78 could trigger a self-fulfilling prophecy, as algorithmic trading systems and short-sellers amplify downward momentum. The Chaikin Money Flow (CMF) at a nine-month low and whale exodus to exchanges like Binance further underscore the fragility of XRP’s short-term trajectory [4].

Strategic Implications for Investors

Investors must navigate this dichotomy with caution. For those bullish on XRP’s long-term potential, the $2.78 level offers a strategic entry point if it holds, with a potential rebound toward $3.00–$3.30. However, aggressive short-term bearishness—particularly if $2.78 fails—could force a reevaluation of risk exposure.

The coming weeks will be pivotal. A breakout above $3.08 could validate the Cup and Handle pattern and attract ETF inflows, while a breakdown below $2.78 may accelerate a correction toward $1.90. Given the market’s emotional volatility and conflicting signals, disciplined risk management and close monitoring of key levels are essential.

Source:
[1] XRP Could See Further Weakness After 6% Drop as Peter ... [https://www.bitget.com/news/detail/12560604939906]
[2] 'Very Negative': Legendary Trader Issues Major XRP Price ... [https://u.today/very-negative-legendary-trader-issues-major-xrp-price-warning]
[3] XRP's Critical Juncture: Navigating Peter Brandt's Bearish ... [https://www.ainvest.com/news/xrp-critical-juncture-navigating-peter-brandt-bearish-outlook-market-volatility-2508]
[4] XRP Poised for a Deeper Correction Amid Deteriorating On-Chain and Technical Metrics [https://www.ainvest.com/news/xrp-poised-deeper-correction-deteriorating-chain-technical-metrics-2508]
[5] XRP's Path to $20: Technical Breakouts, Institutional Momentum, and Real-World Utility [https://www.ainvest.com/news/xrp-path-20-technical-breakouts-institutional-momentum-real-world-utility-2508]
[6] XRP's Distribution Phase and Path to $20: A Bullish Outlook [https://www.bitget.com/asia/news/detail/12560604937170]