XRP's Bearish Momentum Intensifies: Is Now the Time to Secure Profits or Avoid Further Losses?

The XRP price has entered a critical phase, with technical and on-chain signals converging to confirm a deepening bearish bias. After breaking below the $3.00 mark on August 20, 2025, the altcoin is testing the $2.90 support level—a threshold that has temporarily contained the sell-off since mid-August. However, the structural weaknesses in XRP's near-term trajectory are becoming increasingly difficult to ignore.

Technical Breakdown: A Structural Shift in Momentum

The recent collapse below $3.00 has invalidated key bullish scenarios, exposing a bearish descending triangle pattern on the daily chart. This pattern, defined by a flat support line and a descending resistance, historically predicts a 18% drop to $2.40 from current levels. The RSI (14-period) has also crossed below the 50 level, reinforcing the dominance of sellers. A bearish engulfing candle closed the session, signaling a potential acceleration in the downtrend.

For traders, the $3.30 resistance level remains a critical pivot. A sustained rebound above this level could trigger a short-term rally toward $3.50. However, the current momentum suggests that this scenario is unlikely without a dramatic shift in market sentiment. Stops below $2.90 are prudent for short-term long positions, as a decisive break below this level could trigger a cascade of algorithmic selling toward $2.60 and $2.00.

Bearish Divergence and Network Activity: A Tale of Two Metrics

Technical divergence is compounding the bearish case. The XRP/BTC pair has formed higher lows since July 10, but the RSI has declined from overbought conditions (75) to 43—a classic bearish divergence. This disconnect between price and momentum often precedes sharp corrections. Meanwhile, the XRP Ledger's network activity has collapsed. Daily active addresses (DAAs) have plummeted from 608,000 in March to just 33,000—a 94% drop—while transaction volume has halved since June. These metrics reflect waning user engagement and a lack of fundamental demand.

The cumulative volume delta (CVD) remains negative since July 28, indicating sustained selling pressure. Over 91% of XRP's supply is still in profit at current prices, creating a “profit-taking overhang” that could exacerbate the sell-off. Historically, when XRP's supply in profit exceeds 90% (as seen in 2018 and 2021), it has been followed by corrections of 85–95%. The NUPL indicator's entry into the “belief–denial” zone further underscores the risk of a deeper downturn.

On-Chain Flow: Sustained Selling Pressure from Large Holders

On-chain data reveals a troubling narrative of sustained distribution. Large holders have been offloading tokens since July, with 470 million XRP liquidated in recent weeks. This activity coincides with a surge in exchange inflows as traders prepare to liquidate gains. Ripple's routine release of 1 billion XRP tokens from escrow has added to the downward pressure, despite the company's insistence that this is a standard practice.

While some “whale” addresses have accumulated XRP around the $2.85–$2.81 range, the broader picture remains bearish. Exchange outflows are mixed, but the dominance of sellers is evident in derivatives markets, where short interest and declining net long positions signal a shift in positioning. Geopolitical risks and macroeconomic uncertainty—such as potential U.S. rate cuts and global tensions—have further amplified risk-off sentiment, pushing capital out of crypto into safer assets like gold.

Investment Implications: Secure Profits or Sideline?

The confluence of technical breakdowns, bearish divergence, and on-chain selling pressure paints a clear picture: XRP is in a structural downtrend. For short-term traders, securing profits or tightening stops below $2.90 is advisable. A move below $2.60 could trigger a test of the $2.00 support zone, where long-term investors might consider dollar-cost averaging into the $2.55–$2.00 range. However, this strategy requires strict position sizing and risk management, given the heightened volatility.

For cautious investors, staying sidelined until XRP reclaims $3.30 with conviction may be the safer approach. A failure to hold this level could extend the correction to $2.40, aligning with the descending triangle's target. Meanwhile, monitoring on-chain metrics like DAAs and CVD will be critical for identifying potential turning points.

In conclusion, XRP's near-term outlook is heavily bearish, driven by a breakdown in key support levels, deteriorating network activity, and sustained selling pressure. While long-term accumulation opportunities may emerge at $2.00–$2.55, the path of least resistance remains to the downside. Investors should prioritize risk management and remain vigilant for signs of a reversal—or further capitulation.