XRP's Bearish Technical Signals: Assessing Short-Term Risks and Market Sentiment Shifts in Late 2025

As of late 2025, XRP has entered a critical phase marked by bearish technical signals and evolving macroeconomic pressures. The asset's price action, coupled with on-chain and derivatives market dynamics, paints a picture of heightened short-term risk and shifting investor sentiment. This analysis evaluates the technical and macroeconomic factors driving XRP's downward trajectory while exploring potential inflection points for market participants.

Technical Deterioration and Key Support Levels

XRP's failure to hold above the $2.00 psychological level-a historically significant floor-has intensified bearish momentum. As of December 2025, the price oscillated between $1.83 and $1.98, with the 10-day exponential moving average near $1.96 acting as dynamic resistance. The 200-day simple moving average at $2.59 further underscores the medium-term bearish bias, as the asset remains well below this long-term trendline.

Technical indicators corroborate the bearish narrative. The Relative Strength Index hovered in the 37–38 range, signaling oversold conditions but failing to trigger a meaningful rebound. Meanwhile, the Moving Average Convergence Divergence (MACD) remained negative, reflecting sustained downside pressure. Analysts have identified two critical support levels: $1.83 as an immediate floor and $1.62 as a deeper correction target. A breakdown below $1.83 could accelerate selling, testing the $1.62 level and potentially triggering broader market panic.

Macroeconomic Pressures and Carry Trade Unwinding

Beyond technicals, macroeconomic factors are amplifying XRP's vulnerability. Rising Japanese Government Bond yields have disrupted yen carry trades, a key funding mechanism for risk assets like crypto. As capital flows shift toward safer instruments, liquidity for altcoins such as XRP has contracted, exacerbating downward pressure. This dynamic is particularly relevant for XRP, given its historical sensitivity to cross-border capital movements and institutional demand.

The broader cryptocurrency market has also contributed to XRP's bearish environment. A 2.4% decline in the sector over 24 hours, coupled with inflows into Bitcoin ETFs, has redirected capital away from altcoins. While XRP-specific ETFs continue to attract modest inflows, these have yet to offset the broader outflows from the altcoin segment.

On-Chain and Derivatives Market Signals

On-chain data reveals a market in flux. Elevated trading velocity-indicating rapid turnover rather than accumulation-suggests that XRP is being actively traded but not held for long-term value. This liquidity-driven activity increases the risk of sharp corrections, as even minor imbalances in buy/sell pressure could trigger cascading losses.

Derivatives markets further reinforce the bearish outlook. Short positions have expanded, with persistently negative funding rates reflecting traders' pessimism. These metrics highlight a structural shift in sentiment, as speculative positioning tilts toward downside bets. However, the absence of extreme short-interest levels leaves room for a potential short-covering rally if XRP stabilizes near key support zones.

Short-Term Risks and Sentiment Shifts

The immediate risk for XRP lies in its inability to reclaim the $2.00 level, which could trigger a self-fulfilling sell-off. A breakdown below $1.83 would likely test the $1.62 support, with a failure to hold there potentially extending the correction toward $1.40–$1.50. Such a move could also reignite broader market fears, particularly if Bitcoin's dominance continues to rise at the expense of altcoins.

Conversely, a rebound above $1.98-particularly if accompanied by a surge in volume-could signal a short-term bottoming process. This scenario would require a reversal in macroeconomic conditions, such as a stabilization in JGB yields or renewed institutional interest in XRP's ETF product. However, given the current environment, these outcomes remain speculative.

Conclusion: Navigating the Bearish Landscape

For investors, XRP's bearish technical signals and macroeconomic headwinds necessitate a cautious approach. Short-term traders should monitor the $1.83 and $1.98 levels for directional clues, while longer-term holders may need to reassess risk exposure until the asset demonstrates a clear reversal in sentiment. The derivatives market's short-heavy positioning and on-chain liquidity dynamics suggest that volatility will remain elevated, with sharp corrections a distinct possibility.

As the market navigates these challenges, the interplay between macroeconomic shifts and technical resilience will be critical. XRP's ability to stabilize near key supports-or break decisively lower-will shape its trajectory in early 2026.