Monday witnessed a severe sell-off across cryptocurrency markets, with XRP experiencing particularly steep declines. The digital asset breached the psychologically significant $2 support level, tumbling to a low of $1.85 before finding a tentative footing. Analysts point to a confluence of geopolitical tensions and forced liquidations of leveraged bullish bets as the primary catalysts for the sharp downturn.
Geopolitical Tensions Trigger Risk-Off Sentiment
The immediate spark for the broad market retreat originated from traditional finance. New 10% tariffs on eight European Union nations, announced by US President Trump and set to take effect February 1, 2026, escalated transatlantic trade disputes. This development prompted a classic flight from risk, with investors exiting volatile holdings like cryptocurrencies. The prevailing mood is captured by the Crypto Fear & Greed Index, which currently reads 44, squarely in “Fear” territory.
Technical Breakdown and Price Action
XRP’s price structure suffered considerable damage during the session. Starting the day near $2.06, the asset underwent a flash crash that briefly sent it spiraling to $1.84. It now trades in a range between $1.93 and $1.96, marking a daily loss exceeding 4%.
The break below the $2.05 support occurred with heavy trading volume, signaling strong selling pressure. Approximately 335 million XRP changed hands in a single hour during the decline. Furthermore, the coin now trades below its 200-day moving average of $2.35, confirming a weakening medium-term trend. Technical analysts warn that a failure to defend the $1.93 level could open the door for a further slide toward $1.77.
Leverage Unwind and Whale Movements
Forced liquidations exacerbated the downward move. Data from CoinGlass shows traders lost over $800 million across the crypto market. XRP-related long positions worth roughly $29.7 million were wiped out, representing the largest liquidation event for the asset since November 2025.
Should investors sell immediately? Or is it worth buying XRP?
In the hours preceding the crash, major investors transferred approximately 65.5 million XRP, valued at $129 million, to exchanges. This activity suggests coordinated profit-taking, which added substantial selling pressure. However, a longer-term on-chain trend tells a different story: XRP holdings on the Binance exchange have dropped 45% over the past twelve months, from $10.16 billion to $5.55 billion. This significant outflow indicates a shift toward cold storage, effectively reducing the readily available supply on the market.
Fundamental Developments Provide a Silver Lining
Despite the negative price action, positive fundamental developments for Ripple, the company closely associated with XRP, emerged this week. Ripple secured preliminary approval for an Electronic Money Institution (EMI) license in Luxembourg. This license would grant access to all 27 EU member states upon finalization.
Additionally, adoption of the Ripple USD (RLUSD) stablecoin is growing. More than 30% of its total supply now resides on the XRP Ledger, and its liquidity has increased by 76%.
The key focus for traders in the near term will be whether XRP can stabilize within the $1.90 to $1.93 zone. Regaining the $2.05 level is viewed as the minimum requirement to neutralize the current technical weakness.
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