XRP's Downtrend Channel Post-ETF Selloff: Is $2.75 the Next Major Support Level?

The recent selloff in XRP following the launch of the REX-Osprey ETF has left the token in a precarious technical position, with bears intensifying their assault on critical support levels. As the market grapples with the aftermath of institutional dumping and regulatory uncertainty, the question on traders' minds is whether $2.75 can hold as a psychological floor for the asset.

Technical Analysis: A Bearish Channel Takes Hold

XRP's price action has formed a clear descending channel post-ETF debut, defined by lower highs at $2.856 and lower lows at $2.83 XRP Forms Downtrend Channel After ETF Selloff, Next Target $2.75^[1]. This pattern, confirmed by a flash crash on September 19 that saw the token plummet from $2.87 to $2.77 on 656.1M in volume—six times the daily average—signals institutional selling pressure overwhelming retail optimism XRP Price Forecast: XRP-USD Struggles at $2.80 as ETF Frenzy …^[2]. The breakdown below the 50-day EMA at $2.90 and resistance near $2.97 has handed short-term momentum to bears XRP Price Forecast: XRP-USD Struggles at $2.80 as ETF Frenzy …^[2].

Key technical indicators reinforce the bearish bias. The MACD has flipped into negative territory, while the RSI has dropped below 50, reflecting intensifying selling pressure XRP Price Forecast: XRP-USD Struggles at $2.80 as ETF Frenzy …^[2]. If the $2.82 support level fails, XRP could retest the $2.75–$2.70 range, a level that has historically acted as a psychological barrier for the asset XRP Forms Downtrend Channel After ETF Selloff, Next Target $2.75^[1]. A breach of $2.75 would likely trigger further liquidations, given the $22M in long-position liquidations already reported across exchanges XRP Price Forecast: XRP-USD Struggles at $2.80 as ETF Frenzy …^[2].

Market Sentiment: Institutional Profit-Taking and Regulatory Headwinds

The ETF-driven selloff was not merely a technical correction but a reflection of broader market sentiment. The REX-Osprey ETF's record $37.7M in first-day trading volume initially buoyed bullish expectations, but large holders and institutions quickly pivoted to profit-taking, exacerbating the decline XRP Forms Downtrend Channel After ETF Selloff, Next Target $2.75^[1]. Whale activity has also signaled continued selling pressure, with large wallets reducing holdings by 1.2% and moving XRP to exchanges Latest XRP (XRP) Price Analysis - CoinMarketCap^[4].

Regulatory headwinds have compounded the bearish narrative. Rejections of U.S. ETF applications and ongoing uncertainty about crypto's legal status have left investors cautious, overshadowing Ripple's recent initiatives like its RLUSD stablecoin and global partnerships XRP ETF Rejection Hits Price Hard as Market Turns …^[3]. While some analysts cite a bull flag formation on the weekly chart as a sign of potential recovery to $5 or $15, such optimism hinges on stabilizing institutional flows—a scenario that appears distant given current conditions XRP Price Forecast: XRP-USD Struggles at $2.80 as ETF Frenzy …^[2].

The $2.75 Threshold: A Critical Psychological Battleground

The $2.75 level represents more than a technical support—it is a psychological battleground where buyer conviction will be tested. Historically, this level has acted as a floor during prior corrections, but the current context is uniquely bearish. Institutional selling, macroeconomic jitters, and the absence of a clear catalyst for a rebound suggest that even a temporary rebound above $2.75 may not signal a trend reversal.

Backtesting XRP's performance around the $2.75 support level from 2022 to 2025 reveals mixed outcomes. A simple buy-and-hold strategy generated an average excess return of approximately +0.67 percentage points over 30 days relative to the benchmark, but the win rate hovered near 50%, indicating no statistically significant edge at common confidence levelsBacktest of XRP’s $2.75 Support Level (2022–2025)^[5]. This suggests that while $2.75 has occasionally provided a short-term floor, its reliability as a long-term support remains uncertain under current conditions.

For now, the focus remains on whether XRP can defend $2.75 without triggering a cascade of stop-loss orders. A successful defense could invite short-covering and a test of the $2.83–$2.85 resistance zone. However, a breakdown below $2.70 would likely extend the downtrend toward $2.50, aligning with broader market weakness in risk assets.

Conclusion

XRP's post-ETF selloff has created a textbook bearish setup, with technical indicators and market sentiment aligning against near-term recovery. While $2.75 offers a glimmer of hope for bulls, the path to a sustained rebound remains fraught with challenges. Investors should monitor institutional activity and regulatory developments closely, as these factors will ultimately determine whether the $2.75 level becomes a catalyst for a reversal or a stepping stone to further declines.