XRP's Fragile Rally and the Looming 41% Breakdown Risk in 2026

XRP's recent price action near $1.85–$1.88 as of December 29, 2025, masks a volatile tug-of-war between bullish accumulation and bearish distribution. While retail and mid-term holders are showing signs of conviction, whale activity and technical indicators suggest a precarious balance that could collapse into a sharp selloff by early 2026. This analysis dissects the on-chain dynamics and price-level vulnerabilities shaping XRP's trajectory.

On-Chain Dynamics: A Clash of Conviction and Exit

Long-term holders (LTHs) have shifted from net selling to accumulation, with two significant buying bursts-9.03 million XRP on December 27 and 15.90 million XRP on December 29-highlighting late-cycle behavior in a local downtrend according to technical analysis. Meanwhile, mid-term holders (1–3 month holding period) have expanded their share of the total supply from 9.58% to 12.32% over a month, signaling increased risk-taking as prices approach the lower end of the two-year range $1.58–$3.50.

However, this optimism is counterbalanced by bearish whale activity. Large holders in the 100 million–1 billion XRP range reduced their holdings by 100 million XRP on December 28, while the 1–10 million XRP group cut holdings by 30 million XRP-equivalent to $55–60 million in selling pressure. This divergence creates friction, preventing a clean breakout from the descending channel. Notably, whales have strategically accumulated 340 million tokens between September and November 2025 at support zones between $1.90 and $2.20, reflecting confidence in XRP's long-term trajectory.

Technical Vulnerabilities: The Fragile $2.00 Ceiling

XRP's inability to sustain a breakout above $2.00 underscores the dominance of bearish sentiment. The $1.79 level is currently the immediate support line. A daily close below this threshold would increase the probability of a breakdown toward $1.64 and $1.48, with a projected 41% downside risk to $1.27. Resistance clusters at $1.98–$2.00 and $2.05–$2.10 remain formidable, and a successful breakout above $2.28 would be required to reverse the bearish channel.

The recent accumulation by whales at $1.90–$2.20 suggests they view these levels as attractive entry points. However, if XRP fails to break above $2.02-a critical psychological and technical threshold-it could trigger a retest of $1.79, exposing the asset to a cascading sell-off. notes that macro headwinds, including broader market volatility, further complicate the path to a sustained rally.

Strategic Implications for Investors

For investors considering a contrarian or hedging position in XRP, timing and risk management are paramount. The clash between LTH accumulation and whale distribution creates a high-probability scenario for a volatile correction. A short-term bullish case hinges on XRP breaking above $2.02 and holding key moving averages, but this requires overcoming both technical resistance and macroeconomic headwinds.

Conversely, a breakdown below $1.79 would validate a bearish thesis, with $1.48 as the next critical support. Investors should consider hedging long positions with stop-loss orders near $1.75 or exploring short-term options strategies to capitalize on the 41% downside risk. The strategic accumulation by whales at $1.90–$2.20 also suggests that any rally above $2.00 may face renewed selling pressure from large holders.

Conclusion

XRP's current rally is a fragile construct, underpinned by retail optimism but threatened by whale exits and technical exhaustion. While long-term holders are buying aggressively, the bearish bias from large holders and the proximity to key support levels create a high-risk environment. Investors must remain vigilant, as a breakdown below $1.79 could trigger a sharp selloff into 2026. Position sizing, stop-loss placement, and a clear understanding of on-chain signals will be critical for navigating this volatile phase.