What’s The Downside Risk For XRP?

February 3rd, 2026 by Trefis Team
XRP: Bitwise XRP ETF logo
XRP
Bitwise XRP ETF

XRP price trades at $1.56, down 57% from its July 2025 peak of $3.65. It’s testing October crash lows after two brutal months.
XRP crashed twice in four months. October saw a 45% intraday plunge from $2.83 to $1.53 on Trump’s tariff threats. It recovered to $2.36 but couldn’t hold. January ended at $1.50 – the lowest since October – after losing 10.6%. February started with another 6% drop.

Why is this happening despite everything going right? The SEC lawsuit ended. ETFs launched with $1.3 billion in inflows. Ripple expanded in Singapore. RLUSD stablecoin launched.

Because catalysts are exhausted. Profit-taking, Bitcoin weakness (now under $75k), and leverage liquidations dominated. Around $6 billion in positions have been wiped out since the start of the year. Bitcoin and Ethereum have consistently led the liquidations, with Ethereum traders suffering particularly heavy losses during the late January slide.

That being said, if you seek an upside with less volatility than holding an individual stock or token like XRP, consider the High Quality Portfolio. It has comfortably outperformed its benchmark—a combination of the S&P 500, Russell, and S&P MidCap indexes—and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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Image by Miloslav Hamřík from Pixabay

Historical Crashes: The Three-Year Pattern

Does XRP crash often? Yes.

  • 2023 – The SEC Victory Fade: Won lawsuit in July, rallied 96%, then bled the rest of the year. Ended at $0.62 despite the legal win.
  • 2024 – The Trump Pump: Exploded 5x in one month (Nov-Dec) from $0.50 to $2.80 on speculation that Trump would fire SEC Chair Gensler. Formed a double-top and reversed. Spent most of 2024 grinding between $0.50-$0.70.
  • 2025 – Everything Goes Right, Price Goes Wrong: The instructive year. XRP achieved every catalyst – SEC resolution, ETF launches, regulatory approvals, and stablecoin launch. Still crashed 48% from the July peak. Pattern is clear: initial euphoria, then distribution.
  • October 2025 – The Flash Crash: 45% intraday collapse proved excessive leverage and macro sensitivity override fundamentals.

What This Tells Us: XRP rallies on news speculation, then bleeds. It’s driven by external catalysts, not organic demand. Leverage amplifies crashes. It underperforms in bull markets but occasionally pumps during corrections.

Price Targets: How Low?

  • Current Support ($1.50-$1.60): October flash crash low. If this breaks, algorithmic selling accelerates.
  • $1.25-$1.26: Next major support. Upper bound of the 2024 pre-Trump range. Requires ETF outflows or BTC below $70k.
  • $1.18: Descending triangle target. 25% drop from current levels if the pattern completes.
  • $1.00: Psychological barrier. Requires a major deleveraging event – another liquidation cascade from macro stress or exchange failure.
  • $0.80: Severe risk-off scenario. BTC below $60k, equity crash. Nearly 50% decline from here.
  • $0.53: Crypto winter. Multi-year bear with BTC at $30k-$40k. Extreme scenario.

Why More Downside?

  • No Catalysts Left: ETFs launched. SEC resolved. What drives it higher now? Banking integration is multi-year, not 2026.
  • Supply Pressure: Ripple unlocks 1 billion XRP monthly. 300 million enters circulation each time. Perpetual selling pressure for 48 months.
  • Macro Weakness: Bitcoin down 14% in a week. Trump tariffs are creating uncertainty. No tailwind.
  • Leverage Hasn’t Reset: Despite October’s purge, open interest remains elevated. Another drop triggers cascades.
  • February Seasonality: XRP averages -8% in February. Last February it fell 29%.
  • No Organic Demand: Only rallies on news. Between catalysts, it bleeds.

Why It Might Hold?

  • Whale Accumulation: Large wallets accumulated 710 million XRP in January.
  • ETF Flows Still Positive: $1.3 billion in assets, although XRP has now recorded net daily outflows.
  • Oversold: RSI at around 29. Potential technical bounce.
  • Historical Pattern: Rallied 340% in 2021’s corrective phase. Could repeat.

Related – The Bull Case For XRP

The Answer

  • Base case: $1.25-$1.50 through Q1 2026. Drifts lower, tests $1.25, finds equilibrium.
  • Breakdown (25%): $1.00-$1.18. BTC breaks $70k, or a liquidation event triggers capitulation.
  • Collapse (10%): Below $1.00. Requires systemic event – exchange failure, recession, regulatory reversal.
  • Recovery (5%): Above $2.00. Needs an unidentified catalyst. Unlikely.

Technically, XRP can fall to $0.80; $0.53 under the worst-case. Realistically, $1.00-$1.25 over 3-6 months. Most likely, $1.25-$1.75 consolidation.

The more important question: what makes it go up? Until that has an answer beyond speculation and leverage, the downside exceeds the upside.

That’s why investing in a single stock or token without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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