XRP Drops Below $2 as ETF Outflows Spike and Stablecoin Settlement Debate Clouds Outlook

Overview

XRP has recently dropped below the $2 mark, continuing a week-long decline that has raised concerns among traders regarding its short-term outlook. This downward trend coincides with significant outflows from XRP exchange-traded funds (ETFs), broader market weaknesses linked to U.S. tariff developments, and ongoing discussions surrounding Ripple’s focus on stablecoins for global payments.

XRP’s Decline and Market Context

The decline in XRP’s price follows a brief recovery in mid-January when it reached around $2.20. Over the weekend, XRP fell to approximately $1.85, a move characterized by market commentators as a liquidity sweep. This price trend indicates a bearish sentiment, with XRP consistently trading below critical moving averages, including the 50-day and 200-day levels. Resistance has formed near the $2 mark, suggesting that upward momentum is currently limited.

ETF Outflows Intensify Selling Pressure

XRP-linked ETFs experienced their largest daily outflow since their inception in November 2025. On January 20, these products saw an outflow of roughly $53 million, primarily driven by the Grayscale XRP ETF. This development has caused cumulative net inflows to revert to levels not seen since early January. The outflows from XRP ETFs reflect a broader risk-off sentiment across U.S. markets, as Bitcoin and Ethereum ETFs also recorded significant redemptions. In contrast, only Solana and Chainlink products managed to attract new capital during this period.

U.S. Tariff Developments Contribute to Market Weakness

The sell-off in the crypto market has been exacerbated by renewed concerns regarding U.S. tariff threats against Europe and Greenland. These developments triggered the most considerable intraday market drop since October 2025, influencing investor sentiment and leading to increased selling pressure across various digital assets.

Technical and On-Chain Indicators Signal Weakness

From a technical analysis perspective, XRP’s price movements indicate a bearish trend. Key indicators such as the Percentage Price Oscillator and MACD suggest ongoing negative momentum. Analysts have identified the $1.85 to $1.90 range as a crucial support zone, warning that further downside may occur if selling pressure continues. On-chain data provided by Glassnode highlights rising stress among long-term holders of XRP, as those who acquired the token six to twelve months ago are now holding at higher cost bases than more recent buyers. This situation may lead to increased selling during minor price rallies, as holders seek to exit their positions.

Ripple’s Focus on Stablecoins Raises Questions

Adding to the uncertainty surrounding XRP is Ripple’s increased emphasis on stablecoins as a key component of future global settlements. The company’s president has indicated that regulated stablecoins like Ripple USD (RLUSD) could become foundational in business-to-business transactions over the next five years. Despite Ripple executives asserting that XRP and the XRP Ledger remain integral to the company’s infrastructure, the lack of direct references to the token in recent discussions has left some holders feeling uneasy. While RLUSD’s market capitalization has seen rapid growth and stablecoin activity on the XRP Ledger has increased, investors are closely monitoring how this shift may impact sustained demand for XRP itself.

From author

The current situation surrounding XRP highlights the interplay between market dynamics, regulatory developments, and the strategic direction of Ripple. As traders assess the implications of ETF outflows and the company’s focus on stablecoins, the future trajectory of XRP remains uncertain.

Impact on the crypto market

• XRP’s decline below $2 reflects broader market weaknesses and increased selling pressure.
• Significant outflows from XRP ETFs suggest a shift in investor sentiment and risk appetite.
• U.S. tariff threats have contributed to heightened volatility in the crypto market.
• Technical indicators point to potential further downside for XRP, raising concerns for traders.
• Ripple’s focus on stablecoins may shift investor attention away from XRP, impacting its demand and market perception.