XRP Price Volatility: What's Driving the Drop and How to Navigate It

• XRP has dropped nearly 50% since late 2025, with recent liquidation events pushing prices below $1.50.
• Institutional ETFs have added $1.6 billion in XRP since January 2026, but spot prices remain pressured by leveraged liquidations and macroeconomic deleveraging.
• Evernorth Holdings, one of the largest XRP holders, faces $380 million in unrealized losses as prices continue to fall.

The recent sell-off in XRP has been intense and fast-moving, catching many investors off guard. In just a few months, the token has fallen nearly 50% from its late 2025 high, with recent volatility amplified by leveraged liquidations and macroeconomic deleveraging. The most dramatic single-day move came when XRP plummeted 16% as $46 million in derivatives were liquidated, mostly from leveraged long positions. This event not only triggered cascading selling pressure but also exposed the fragility of speculative positioning in a market that still feels more like a high-beta asset than a utility-driven one.

The broader institutional picture is more mixed. While spot ETFs have added over $1.6 billion in XRP assets since January, the impact of that capital has been overshadowed by persistent selling pressure and macro-driven deleveraging. This tension between institutional demand and speculative dynamics is at the heart of XRP's current price action. The $1.00 psychological level is now in view, and a breakdown could trigger further leveraged selling, accelerating the decline.

Is XRP's Price Drop Sustainable, or Is a Rebound Imminent?

XRP's price has historically been volatile, but the recent selloff has taken on a more systemic character. Data from CoinGecko and CryptoQuant shows that large holders like Evernorth Holdings—home to roughly 0.473% of the circulating XRP supply—are facing significant unrealized losses. At current prices, Evernorth's holding has lost over $380 million in value since its peak. This kind of financial stress in the largest stakeholders raises the risk of forced asset sales, which could further depress prices in a feedback loop.

The current price action is also shaped by technical patterns. XRP is trading within a descending channel that has defined its movement since mid-2025. Prices are now nearing the channel's lower boundary, which historically has acted as a key support level before breaking down. The Relative Strength Index (RSI) is showing signs of bearish divergence, which often signals that the upside momentum has faded, and a correction is imminent.

What's Driving XRP's Volatility: Leverage, Macro, and Positioning

A key factor behind the recent XRP sell-off is the unwind of leveraged positions. As of early 2026, open interest in XRP derivatives was at a multi-month low, suggesting that forced liquidations were a major factor in the recent drop. This kind of unwinding is amplified by XRP's high-beta nature—its price moves more dramatically in response to broader market forces than more stable assets like Bitcoin or Ethereum.

Macro conditions are also playing a role. The Federal Reserve's tightening of liquidity and a shift toward a more hawkish stance are reducing the availability of speculative capital, which has amplified selling pressure in the derivatives markets. With fewer buyers stepping in to absorb the flood of liquidation orders, XRP's price has been pushed lower despite the inflow of institutional capital.

What to Watch for a Potential XRP Recovery

Investors who are considering buying XRP at these levels need to watch for key technical and institutional signals. The $1.00 level is a critical psychological barrier. If XRP can hold above that level, it may signal that the worst of the forced deleveraging is over and that institutional demand could start to reassert itself.

Institutional flows are also an important indicator. While ETF inflows have been steady, they need to accelerate to offset the ongoing selling pressure. A key sign that institutional demand is gaining traction would be a sustained rebound above the $1.97 level, which would signal that large investors are starting to take a more bullish stance.

On the macro side, any easing of the Federal Reserve's tightening cycle could provide a tailwind for XRP and other crypto assets. However, the current market is still pricing in a more hawkish scenario, which means that investors should be prepared for continued volatility in the near term.

Finally, Ripple's ongoing partnerships and regulatory developments will play a crucial role in shaping XRP's long-term trajectory. The recent integration of Hyperliquid into Ripple Prime and the launch of XRPL Permissioned Domains are both positive developments that could help attract new institutional demand. If Ripple can continue to expand its network and secure regulatory clarity, it could provide a stronger foundation for XRP's price to stabilize and potentially rise in the coming months.

The Long-Term Outlook for XRP: Real-World Adoption and Market Conditions

While the near-term outlook for XRP is still uncertain, the long-term potential is tied to real-world adoption and macroeconomic conditions. Ripple's On-Demand Liquidity (ODL) product is already being used by over 300 banks and payment companies, and the company has expanded its partnerships with central banks in Palau and Montenegro for CBDC development. These real-world use cases are a key differentiator for XRP compared to other speculative cryptocurrencies.

Analysts from firms like Messari and CoinMetrics frequently highlight the utility of XRP in cross-border payments as a key factor in its long-term valuation. While XRP's current price is still far from the $5 mark that some optimistic forecasts predict by 2030, the path to that level depends on several concurrent factors, including increased transaction volume, regulatory clarity, technological execution, and network effects.

Ultimately, investors who are considering XRP should focus on tangible metrics like ODL volume, new partnership announcements, and regulatory developments. These are the most reliable indicators of the token's long-term value, rather than short-term price fluctuations driven by leverage and macroeconomic conditions.