XRP Plunges as Key Levels Break Down in Broader Crypto Sell-Off

XRP has fallen below $2.00 amid a broad decline in crypto markets, according to recent data. The token is struggling to maintain a bullish trend as investors continue to unwind positions.

Retail interest in XRP has waned, despite steady inflows into XRP-related ETFs. Open Interest (OI) in XRP futures has declined from a recent peak of $4.55 billion to an average of around $4 billion, indicating reduced speculative activity.

Traders are increasingly entering long positions as the OI-Weighted Funding Rate metric has risen from -0.0018% to 0.0051%, suggesting some appetite for risk.

Why Did This Happen?

XRP ETFs have continued to attract inflows despite the price decline. The latest data shows $38 million in inflows last week, with the cumulative total reaching $1.22 billion. However, XRP remains down nearly 20% since mid-November, indicating ETF inflows have not translated into strong price action.

The XRP price has been below all major exponential moving averages, including the 50-day EMA at $2.07, the 100-day EMA at $2.21, and the 200-day EMA at $2.32. This suggests a bearish trend remains intact.

The Relative Strength Index (RSI) is at 51, signaling a potential shift from bullish to bearish momentum. The MACD blue line is expected to cross below the red signal line, reinforcing the bearish outlook.

How Did Markets React?

Retail traders and investors are watching for signs that XRP will defend its key support level at $2.00. A break below this level could accelerate the downtrend toward a January 1 low of $1.81.

On the other hand, a sustained recovery above the 50-day EMA at $2.07 could shift the bias to the upside. This would target the 100-day EMA at $2.21 and ultimately the 200-day EMA at $2.32 and key resistance at $2.33.

XRP ETFs, including the Nasdaq-listed XRPI and the Bitwise XRP ETF, have shown varying liquidity and volume profiles. XRPI is currently trading at $12.34, up 3.48% on the day, while the Bitwise XRP ETF is at $23.84 according to market data.

What Are Analysts Watching Next?

Investors are closely watching the outcome of the January 15 vote on the Digital Asset Market Structure and Clarity Act. The legislation aims to clarify regulatory oversight.

The passage of the Clarity Act could encourage institutional participation and improve liquidity in the XRP market. However, delays or amendments could create temporary pressure on XRP prices.

ETF flows remain a key factor in the XRP price outlook. The Bitwise XRP ETF recently saw a $4.51 million inflow in a single day, suggesting some institutional and retail investors are adopting a contrarian stance.

Analysts are also monitoring the performance of leveraged XRP ETFs on NYSE Arca, which amplify intraday volatility. These products could influence price action and liquidity for spot XRP ETFs.

The broader market remains cautious as XRP ETFs continue to attract capital while the token price remains under pressure. The key message is that new money is entering the market through ETFs, either dollar-cost averaging into weakness or rotating from direct spot holdings into ETF form.