XRP Navigates Critical Support Amid Divergent Market Forces

As the year draws to a close, XRP finds itself at a pivotal juncture. The digital asset is caught between opposing currents: macroeconomic headwinds originating from Japan, profit-taking by long-term holders, and a technical breakdown below a key level are being met with persistent institutional interest, primarily via spot ETFs. The central question for the market is whether this institutional demand possesses enough strength to counterbalance the prevailing weakness.

On the bullish side of the equation, U.S.-based XRP spot ETFs continue to demonstrate steady institutional inflows. Since their launch in November, these products have recorded net inflows for 20 to 22 consecutive days, accumulating over $1 billion. An additional $8.54 million entered on December 16, extending the streak.

However, the momentum has undeniably decelerated. While daily inflows in November reached as high as $246 million, recent figures are substantially lower—representing a decline of approximately 96% in daily purchasing volume. Demand persists, but its intensity has waned. Looking further ahead, the anticipated launch of new spot ETFs, including WisdomTree's XRPW product, in early 2026 could provide a fresh catalyst, potentially opening the door to a broader pool of institutional capital.

Macroeconomic Pressure from Japanese Policy Shifts

A significant external risk stems from the Bank of Japan (BoJ). Yields on Japanese Government Bonds (JGBs) have climbed to their highest level since 2007, fueled by robust trade data and market speculation that the BoJ could enact an interest rate hike on Friday, December 19.

This scenario evokes memories of the summer of 2024. At that time, a surprisingly hawkish shift from the BoJ triggered an unwinding of yen-funded carry trades, sparking a broad-based cryptocurrency correction. XRP lost roughly one-third of its value within days during that period. Traders now fear a similarly aggressive move could once again pressure risk assets, including cryptocurrencies.

On-Chain Data Reveals Profit-Taking and Increased Supply

Concurrent with macro concerns, internal selling pressure is mounting. Data from the XRP Ledger indicates a shift in holder behavior.

• Long-term holders (those holding for over 155 days) have recently accelerated profit realization.
• A particularly notable move occurred on December 11, when addresses holding XRP for five to seven years locked in profits of approximately $721.5 million. These coins were originally acquired at an average cost of around $0.40 and sold near $2.03.
• The supply of XRP held on exchanges has risen to 2.66 billion tokens, suggesting a higher volume of coins is available for near-term selling.

This combination of a wide gap between initial cost basis and current price, coupled with growing exchange reserves, points to diminishing short-term optimism among seasoned investors. Interestingly, large "whale" transfers to exchanges have recently stalled, with the last significant movement recorded on October 25. This suggests major players are currently watching from the sidelines.

Technical Picture: Key Levels to Watch

The short-term technical outlook appears bearish. XRP is currently trading at $1.86, having established a new 52-week low. The asset has broken below the psychologically significant $2.00 mark and trades well under its 50-day moving average of $2.18. Losses for the month total about 14%, with the price nearly 39% below its recent annual high.

Should investors sell immediately? Or is it worth buying XRP?

Critical technical levels, as previously established, include:

• Immediate Support: $1.82 (low from November 21)
• Next Support: $1.75
• Key Resistance: $2.00 (psychological barrier)
• Further Resistance: The 50-day EMA at $2.17 and the 200-day EMA at $2.43

A decisive break below $1.82 would reinforce the bearish near-term case, targeting the $1.75 zone. Conversely, a sustained recovery above $2.00 would be an initial signal of potential trend stabilization. A mildly positive technical note is found in the Relative Strength Index (RSI), currently at 28.8, indicating oversold conditions. The indicator is forming higher lows even as price action remains weak—a classic setup for a potential bullish divergence that has preceded 5-8% rebounds in prior consolidation phases.

Foundational Drivers: Regulation and Ecosystem Growth

Beyond short-term volatility, several fundamental factors support the medium to long-term thesis for XRP.

Regulatory progress in the United States, specifically advancements in the Market Structure Bill, provides a tailwind. Clearer guidelines for the classification and trading of crypto assets are seen as a key prerequisite for broader institutional adoption, which would benefit XRP.

In parallel, Ripple is actively pursuing the integration of XRP into other blockchain ecosystems. A significant development is the planned launch of wXRP on Solana—a 1:1 backed, "wrapped" version of the asset. This would enable XRP to be utilized within Solana's decentralized finance (DeFi) landscape, including on decentralized exchanges and in lending protocols, thereby expanding its utility beyond its native ledger.

Outlook: Near-Term Challenges Versus Medium-Term Potential

The environment for XRP remains challenging over the next one to four weeks. Macro events like the BoJ's December 19 decision and upcoming U.S. inflation data may drain liquidity from risk assets or foster investor caution. The recent wave of profit-taking adds further overhead supply.

On a four to twelve-week horizon, however, constructive scenarios emerge. Analysts cite target zones around $2.50 and $3.00, supported by three pillars: continued (if moderated) ETF inflows, progress toward crypto-friendly legislation, and the growing practical utility of the XRP Ledger.

Risks to this outlook persist. A decisively hawkish BoJ signaling multiple 2026 rate hikes, higher-than-expected U.S. inflation prompting a more restrictive Federal Reserve, a reversal of ETF flows from inflows to outflows, or political setbacks for the Market Structure Bill could all dampen the positive scenario. For now, XRP balances between short-term distribution and structural support, with the $2.00 level serving as a clear reference point for the weeks ahead.