Will strengthening metrics trigger a recovery?

Key Takeaways

What drove XRP’s downside move?

XRP’s decline came from the bearish pennant and shrinking profit supply, which increased market fragility.

Which bullish metrics strengthened the rebound narrative?

The falling NVT ratio, declining exchange reserves, and rising funding rates increased momentum for a recovery.

Ripple’s [XRP] supply in profit has fallen to its weakest level since late 2024. Pressure was mounting as the price traded at $2.14 after a sharp 5.29% daily drop, at press time. 

This decline reduces confidence because nearly half of all circulating supply now holds unrealized losses, despite XRP trading far above last year’s low range. 

The Glassnode data shows a clear imbalance because late buyers carry most of the stress as the market pushes into a deeper correction.

XRP’s supply in profit has dropped to 58.5%, its lowest level since November 2024, even though the price remains nearly four times higher at $2.15. 

This indicates a top-heavy market structure, with 26.5 billion XRP currently held at a loss, highlighting the vulnerability of late buyers.

The shrinking share of profitable supply tends to heighten volatility, as traders are more likely to react swiftly when losses deepen.

As a result, XRP now enters a fragile phase, where price stability will largely depend on renewed buyer accumulation around key liquidity zones.

Is XRP’s bearish pennant preparing a drop toward the $2 zone?

XRP continues to move inside a defined bearish pennant that shapes the current lower-high structure on the 4-hour chart. 

The descending trendline controls momentum because sellers continue to react aggressively near the $2.30 resistance level. 

However, buyers still protect the $2.10 zone, which slows the expected breakdown toward the $2 target. 

The pennant structure keeps downside risk active because every rally attempt loses strength before testing the upper boundary. Moreover, the pattern aligns with broad market weakness reflected in the supply-in-profit metrics. 

Even so, a reaction rally may still form once XRP hits the $2.00 liquidity pocket, where demand remains historically strong.

Source: TradingView

XRP’s sharply falling NVT ratio signals…

The NVT ratio dropped more than 50% in one day, as of writing, and this steep decline revealed strong transactional activity relative to market valuation. 

The falling NVT signals undervaluation because rising volume now aligns more closely with underlying network usage. 

Moreover, heavy transactional flow often emerges during major corrections because traders reposition aggressively across short timeframes. This activity strengthens liquidity because demand and supply rotate quickly across exchanges. 

However, fast NVT drops also accompany volatility because markets shift rapidly during strong liquidation phases. 

Still, the falling NVT supports the idea of improving value flow behind XRP, which often precedes stronger recovery attempts after deep pullbacks.

Source: CryptoQuant

Exchange Reserves fall as sellers step back

At the time of writing, Exchange Reserves dropped nearly 3%, and this decline reduces the amount of XRP available for immediate selling across major trading platforms. 

The reduction supports stability because fewer tokens remain ready for forced exits during sharp corrections. 

However, the bearish pennant still guides short-term structure because sellers continue defending lower highs on every bounce. 

The mix creates a balanced environment where reduced reserves lower sell-side strain, but technical momentum still favors bears. 

Moreover, declining reserves often match periods of strategic accumulation because traders keep assets off exchanges when expecting long-term strength. Even so, stronger demand must appear before reserves start shaping a real reversal.

Source: CryptoQuant

Long traders increase pressure

Funding Rates surged more than 50%, at press time, showing aggressive long positioning as traders anticipate a strong rebound near the $2.00 support zone. 

The spike reveals confident demand because traders increase leverage despite the prevailing bearish structure.

However, this behavior raises liquidation risk because leveraged positions respond quickly to sharp wicks during volatile moves. Rising funding often signals bullish intent because traders expect consolidation before recovery. 

Moreover, the funding surge aligns with the improving NVT profile, which strengthens the case for a rebound once XRP taps deeper liquidity. 

Still, long traders must defend the $2.00 zone to validate their conviction and prevent cascading liquidations.

Source: CryptoQuant

What’s next for XRP? 

XRP now builds momentum for a rebound because several bullish metrics strengthen the recovery outlook. 

The falling NVT ratio improves value efficiency across the network, while declining Exchange Reserves lower immediate sell-side pressure near the key $2.00 demand zone. 

Moreover, rising Funding Rates show traders increasing long exposure as they prepare for a reaction rally. 

These signals align with the liquidity pocket near $2, which often drives strong rebounds during corrective phases. 

XRP shows the early signs of recovery strength, and momentum now depends on buyers defending the lower support region with conviction.