XRP's Tumble: Can Support at $1.96 Spark Recovery?

The XRP price, once a top performer in the fourth quarter of 2024, has since become one of the leading laggards in 2025. Ripple has experienced a significant decline, dropping from $3.42 in January to its current level of $2.2. This article explores the potential for a recovery in the XRP price following its recent test of crucial support at $1.96.

The ongoing XRP price crash occurred despite several positive developments in Ripple's ecosystem. Firstly, the likelihood of a spot Ripple ETF has increased, with companies such as 21Shares, Canary, and Grayscale submitting applications. An approval from the Securities and Exchange Commission (SEC) would likely lead to increased inflows, although the impact may be short-term.

Secondly, the XRP Ledger network has seen growing developer interest, with tokens like Ripple USD (RLUSD), Sologenic, Crypto Trading Fund, Coreum, and XRP Army gaining traction. The Crypto Trading Fund (CTF) token price has surged by nearly 20% in the past week, while the RLUSD market cap has reached $132 million, indicating strong demand.

Lastly, there is an increasing likelihood that the SEC will soon drop its litigation against Ripple Labs. The company secured a partial victory in its appeal last year and was ordered to pay a $250 million fine, significantly lower than the $2 billion initially sought by the SEC. The SEC's recent decision to drop charges against other crypto companies like Gemini, Uniswap, and Coinbase suggests a potential resolution in the Ripple case.

The XRP price decline can be attributed to several factors. Firstly, the broader crypto market has experienced softness, with Bitcoin and most altcoins falling in value. The market cap of all coins has dropped to $2.7 trillion. Secondly, the state of fear in the crypto industry has increased, as indicated by the fear and greed index moving to the extreme fear zone of 18. This fear often leads investors to remain on the sidelines, contributing to the overall market decline.

Technically, the XRP price has also fallen due to the coin's transition from the markup phase of the Wyckoff Theory to the distribution phase. This phase is characterized by investor indecision and a lack of clear direction. Additionally, X