XRP Analysis: Bearish Pennant Vs Bullish Fundamentals

XRP Price Analysis: Bearish Pennant Pushes XRP Toward $2 as Bullish Metrics Signal a Potential Rebound

XRP’s Downside Accelerates as Market Fragility Increases

Ripple’s XRP is facing intensified selling pressure after posting a sharp 5.29% daily decline, trading near $2.14 at press time. The drop was fueled by a combination of shrinking supply in profit and a bearish pennant structure, both of which have weakened overall market confidence.

According to Glassnode, XRP’s supply in profit has fallen to 58.5%, its lowest point since late 2024—even though the price remains nearly four times higher than last year’s range. This reveals a top-heavy market, with an estimated 26.5 billion XRP held at a loss, exposing late buyers to higher stress levels.

The imbalance increases fragility because traders holding unrealized losses tend to react faster during sharp market contractions, amplifying volatility and accelerating downside wicks.

Bearish Pennant Keeps XRP Locked Under Selling Pressure

A Potential Drop Toward $2 Remains on the Table

On the 4-hour chart, XRP continues to consolidate within a well-defined bearish pennant, maintaining a structure of lower highs controlled by a descending trendline.

Key technical observations:

Sellers react aggressively near the $2.30 resistance, preventing sustained breakout attempts.
Buyers defend the $2.10 zone, slowing the expected breakdown toward $2.00.
Each rally loses momentum before reaching the pennant’s upper boundary, confirming seller dominance.

This pattern keeps downside risk active, especially given the reduced profit supply and broader market caution. Still, the $2.00 liquidity pocket has historically triggered strong reaction rallies and remains the strongest nearby support area.

NVT Ratio Signals Major Undervaluation During the Correction

Sharp 50% Drop Reveals Surging Network Activity

XRP’s NVT ratio dropped more than 50% in one day, indicating a dramatic increase in transactional activity relative to market valuation. This shift suggests undervaluation and reflects heightened on-chain engagement during the correction.

What the falling NVT means:

Efficiency improves as XRP’s market cap aligns more closely with real usage.
Heavy activity often appears during deep pullbacks as traders reallocate aggressively.
Liquidity increases because supply and demand rotate more frequently across exchanges.

While steep NVT declines can coincide with volatility, they often precede rebound attempts when value flow begins strengthening beneath the surface.

Exchange Reserves Decline as Sellers Step Back

Fewer Tokens Available for Immediate Sell-Offs

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Exchange data shows XRP reserves falling nearly 3% at the time of writing. This trend reduces the amount of XRP available for instant selling and often signals the early stages of strategic accumulation.

Key implications:

Lower reserves ease sell-side pressure during fast corrections.
Traders typically withdraw assets from exchanges when anticipating future strength.
However, the bearish pennant still governs short-term structure, meaning technical pressure persists despite improving fundamentals.

The combination of reduced exchange reserves and weakening profit supply creates a tense but balanced environment, where sentiment swings can accelerate rapidly.

Funding Rates Surge as Long Traders Anticipate a Bounce

XRP’s Funding Rates spiked more than 50%, reflecting aggressive long positioning as traders accumulate ahead of the critical $2.00 support region.

This behavior indicates strong conviction but also elevates risk:

Rising funding rates reveal bullish sentiment, signaling expectations of a stabilization phase.
Leveraged longs increase vulnerability to liquidation cascades if volatility intensifies.
The funding surge aligns with the improving NVT profile, reinforcing the potential for a rebound.

For long traders to maintain control, the $2.00 liquidity pocket must hold with strength. A failure here could trigger rapid, deep liquidations.

XRP Recovery Outlook Strengthens—but Buyers Must Defend $2

XRP is entering a decisive phase where bullish and bearish forces are nearly balanced. Several metrics now favor a rebound:

Falling NVT ratio highlights improved value flow and network efficiency.
Declining exchange reserves reduce immediate sell-side pressure.
Rising funding rates show traders increasingly positioning for recovery.

These factors cluster around the critical $2 support zone, which historically attracts strong accumulation and reaction rallies.

If buyers defend this region convincingly, XRP could establish the foundation for a short-term recovery despite the overarching bearish pennant. Failure to hold the zone, however, risks a deeper correction and intensified volatility.