Egrag Crypto: This Signal Is Very Bullish for XRP Price Long Term

The violent price action on February 6, 2026, set the stage for a classic technical reset. XRP collapsed to a one-year low of $1.36, marking a 14% single-day drop and confirming a major breakdown. This sharp decline drove the Relative Strength Index into deeply oversold territory, a condition popular analyst Egrag Crypto interprets as a bullish "momentum reset."

Egrag argues this is not a minor pullback but the end of a big correction (Wave 2), not a smaller one. The severity of the drop, breaking key support, signals that weak hands have been shaken out. This cleanup clears the path for the next phase: a powerful impulse wave. In Elliott Wave theory, Wave 3 is historically the longest and strongest move in a cycle, and the current setup suggests that phase is now imminent.

The bottom line is that the extreme price drop and oversold RSI are viewed as a necessary, healthy shakeout. While the short-term outlook remains pressured, the long-term signal is bullish. The reset has likely exhausted the selling momentum, positioning XRP for a significant advance once buyers re-enter the market.

Flow Metrics Supporting the Reset

The violent price drop and oversold RSI are not just technical signals; they are confirmed by a surge in market flow. The 14-day RSI fell to 12.442, a level that historically signals extreme fear and exhaustion of selling momentum. This deep oversold condition is the core of the "momentum reset" thesis, suggesting the worst of the selling has likely occurred.

Volume tells the story of capitulation. The 24-hour volume surged to $6.9 billion, a 62.78% increase. This massive flow of capital through the market confirms the breakdown was not a quiet move but a violent shakeout. The price broke multi-month support at $1.50–$1.55 on this elevated volume, validating a clean bear pennant breakdown. The high volume indicates significant positions were closed, clearing the path for a new trend.

This reset narrative is further supported by a collapse in leverage risk. Futures open interest has fallen by roughly 43% over the past two weeks. With so much leverage unwound, the market is less vulnerable to a cascade of liquidations if prices start to move. The combination of extreme oversold RSI, high-volume capitulation, and reduced leverage creates a low-risk, high-reward setup for a reversal. The flow data confirms the cleanup is complete.

Catalysts and Risks: The Path Forward

The bullish reset thesis now hinges on price action at two critical zones. A sustained break below $1.20–$1.22 would open the next measured move target and signal further downside, invalidating the Wave 2 completion narrative. This level is the bear pennant's measured move target; its failure would confirm the breakdown is continuing into a deeper correction.

Conversely, a sustained hold above $1.51–$1.55 would invalidate the bear case and signal a potential Wave 3 start. This zone is the prior multi-month support that was broken on February 6. A decisive reclaim of this level on volume would confirm the "momentum reset" is complete and buyers are reasserting control.

Broader market liquidity tightening amplifies the risk of continued selling pressure across altcoins. As noted, liquidity has tightened across digital assets, reducing the strength of recovery rallies. This fragile macro environment means XRP's path is not isolated; it will be tested by the same systemic pressures affecting the entire crypto market.

For traders, the setup is clear. The $1.28 swing-trade entry level mentioned in the analysis serves as a key invalidation point for the breakdown thesis. A move back above that level would signal a failed test of support and a potential reversal. The coming days will test whether the cleanup is over or if more selling remains.