Is more downside coming as XRP price rests multi-month support?

XRP price is edging closer to losing a key trendline support that has historically served as a strong floor, from which previous rebounds have often begun.

According to data from crypto.news, XRP (XRP) price was off to a strong start for this year, rallying nearly 30% from Jan. 1 to $2.39 on Jan. 6 amid a market rebound across all cryptocurrencies, especially owing to the January effect that played a key role.

However, as is common with most other cryptocurrencies that experienced similar double-digit surges, it lost part of these gains as investors began profit-taking. The cooling sentiment intensified as expectations of a hawkish Fed policy sent the market back into fear mode. At press time, XRP price was trading at $2.06, down 13.6% from last week’s high.

With traders now scaling back bets on interest rate cuts for the first half of 2026, the fifth-largest cryptocurrency is testing critical demand zones near $2.00 to see if bulls can maintain their grip on the short-term trend.

The daily chart shows that a drop below $2 would risk losing a key multi-month descending trendline that it recently turned from resistance to support. Additionally, $2 has served as a horizontal trendline support multiple times since December 2024, making it a very crucial psychological and technical floor for the asset.

At press time, momentum indicators showed signs that bears were at an advantage. Notably, the MACD line was at the brink of forming a bearish crossover with the signal line, while the RSI had formed a bearish divergence as it dropped from overbought levels to touch the neutral threshold.

As such, a sharp drop below $2 could trigger further downside to meet the December low at $1.77, which is down nearly 14% from the current price. However, if bulls manage to push XRP price past the $2.2 psychological resistance level, the bearish setup would likely be invalidated.

Despite the bearish prediction, it must be noted that XRP price still has multiple catalysts building in the background.

For one, data from DeFiLlama shows that the stablecoin supply on the XRP Ledger network has increased by over 10% in the past seven days, largely driven by the growth of Ripple USD (RLUSD), which recently crossed a $1.3 billion market cap.

A stronger stablecoin supply means more liquidity for decentralized finance protocols on the chain, which in turn could boost the utility of XRP as a bridge asset for these transactions.

Also, demand for spot XRP ETFs, while having one weaker period of late, has persisted since their launch. These investment vehicles now hold $1.23 billion in net inflows since their debut.

As institutional demand for regulated crypto exposure continues to build, it could also drive follow-through demand from retail investors who view these inflows as a sign of long term stability, potentially boosting the token’s price over the longer run.