XRP's Bearish Technical Signals and Market Structure Concerns: Prolonged Downtrend or Critical Reversal Point?

The XRP price chart in late 2025 paints a complex picture of conflicting signals. On one hand, technical indicators and price action suggest a bearish consolidation, with key resistance levels repeatedly failing to hold. On the other, institutional inflows, on-chain activity, and legal clarity post-SEC settlement hint at a potential reversal. This analysis dissects whether XRP is entering a prolonged downtrend or nearing a critical inflection point.

Bearish Technical Signals: A Consolidation of Weakness

XRP's inability to break above $2.00–$2.01 has become a recurring theme, with high trading volumes underscoring strong seller activity during each attempt according to analysis. This resistance zone, first tested in late 2024, has now been rejected three times, signaling a lack of conviction among buyers. Meanwhile, support between $1.97–$1.98 has held firm, but further breakdowns below $1.90 could trigger a cascade toward $1.81 or even $1.52.

Technical indicators reinforce this bearish bias. The Relative Strength Index (RSI) remains in neutral-to-bearish territory, with momentum failing to enter bullish expansion phases. The TD Sequential indicator, however, has generated a buy signal near $2.09, suggesting that selling pressure may be easing. This creates a paradox: while short-term bearishness persists, on-chain data and accumulation patterns imply a potential stabilization.

Market Structure: Order Book Dynamics and Institutional Participation

XRP's market structure in 2025 reveals a tug-of-war between institutional demand and technical headwinds. On-chain activity has surged, with the XRP Ledger (XRPL) recording its highest transaction counts and settlement volumes. This real-world usage-driven by cross-border payments and institutional infrastructure-suggests XRP's utility remains intact.

Exchange reserves have also declined, indicating reduced sell-side pressure and potential accumulation in custody or private wallets according to on-chain data. However, order book depth remains a concern. A breakdown below $2.05 could trigger a cascade of stop-loss orders, extending the bearish trend toward $1.90–$1.97. Conversely, a sustained hold above $2.10 could rekindle bullish momentum, with targets at $2.40 and beyond.

Institutional Flows: A Double-Edged Sword

U.S. spot XRP ETFs have become a dominant force, with 30 consecutive days of net inflows pushing assets under management (AUM) to $1.18 billion as of December 2025. These inflows, driven by Franklin Templeton's XRPZ and Bitwise's XRP, have totaled $975–$990 million, outpacing even Bitcoin and Ethereum ETFs according to analysis.

Yet, price action has not mirrored this institutional enthusiasm. XRP remains in a consolidation range around $2.00–$2.20, despite the influx of capital. Analysts attribute this divergence to a "coiled spring" setup, where price may catch up if selling pressure eases according to market commentary. The creation/redemption model of ETFs, which removes tokens from circulation, could further tighten XRP's supply and support future appreciation according to industry experts.

On-Chain Accumulation and Legal Clarity

On-chain metrics paint a nuanced picture. Declining balances on centralized exchanges suggest lower sell-side pressure, while growing balances in custody wallets indicate accumulation. Institutional participation has also expanded, with custody solutions and structured products enabling compliant investment.

The SEC settlement in August 2025, which imposed a $125 million fine but cleared the path for ETF approvals, has been a game-changer. Regulatory clarity has attracted over 70% of ETF inflows from institutional participants. However, the broader market remains cautious. A 9.5% pullback from $2.20 resistance and a TD Sequential "9" buy signal near $2.09 suggest that the market is testing key levels.

The Path Forward: Downtrend or Reversal?

XRP's trajectory hinges on three factors:
1. Technical Breakouts: A sustained move above $2.10 could trigger a 16% rally toward $2.40, while a breakdown below $1.90 would validate the bearish case.
2. Institutional Momentum: If ETF inflows continue to outpace outflows, XRP's supply contraction could drive long-term appreciation.
3. On-Chain Resilience: Declining exchange reserves and growing custody balances suggest that selling pressure is waning.

The TD Sequential buy signal and RSI divergence near $1.90–$2.09 add a layer of optimism according to technical analysis. However, the daily structure remains bearish as long as XRP stays below $2.25 according to market indicators. A breakout above $2.15 would be critical for reversing the trend.

Conclusion

XRP is at a crossroads. While technical indicators and order book dynamics point to a prolonged consolidation or even a deeper correction, institutional flows and on-chain activity suggest a potential reversal. The coming weeks will be pivotal: a break above $2.10 could reignite bullish momentum, while a breakdown below $1.90 would signal a return to bearish territory. For now, the market is in a delicate balance, with both sides vying for control.