The XRP market is navigating a challenging phase as February begins, with price action still reflecting broader weakness across the altcoin sector. Despite occasional rebounds, XRP remains trapped inside a long-term descending structure that has defined its trend for months. On a monthly basis, the token is still down close to 25 percent, underscoring the scale of recent downside pressure.
However, beneath the surface of this bearish structure, a more complex picture is forming. While exchange inflows and price structure continue to flash warning signs, deeper on-chain metrics suggest that the bulk of recent selling activity may be coming from short-term, speculative traders rather than long-term conviction holders. This divergence between surface-level weakness and underlying accumulation is slowly shifting the narrative.
In this article, we explore how a metric that typically signals bearish conditions is now paradoxically helping to build a foundation for potential recovery. We analyze XRP’s falling channel, exchange flows, holder behavior, cost basis data, and momentum indicators to assess whether a reclaim of the $1.70 level is realistic in the weeks ahead.
XRP Price Struggles Under Broader Market Pressure
The cryptocurrency market has entered February with a cautious tone. Bitcoin consolidation and fading risk appetite across global markets have weighed heavily on altcoins, and XRP has not been spared.
XRP’s price remains pinned below key resistance zones, with sellers stepping in on most short-term rebounds. The broader technical structure still reflects a bearish bias, characterized by lower highs and persistent selling pressure.
Yet, it is important to distinguish between price action alone and the behavior of market participants. Price tells only part of the story. On-chain data often reveals early shifts in sentiment before they become visible on charts. In XRP’s case, several indicators are beginning to hint that downside momentum may be slowing.
Rather than seeing widespread panic selling, the data increasingly points toward a rotation of supply from weaker hands into stronger ones.
Falling Channel Structure Continues to Define Trend
XRP has been trading inside a descending channel since mid-2025. This pattern is formed by two parallel downward-sloping trend lines that capture lower highs and lower lows.
Each recovery attempt over the past several months has been rejected near the upper boundary of this channel. At the same time, price continues to gravitate toward the lower boundary, reinforcing the bearish structure.
This type of channel typically reflects a controlled downtrend rather than chaotic capitulation. Sellers maintain pressure, but buyers continue to defend certain levels, preventing a freefall.
Currently, XRP is drifting closer to the lower portion of this channel, which increases the probability of another test of key support. A clean break below the lower boundary would open the door to a deeper decline, while a strong bounce from this area could mark the beginning of a base-building process.
Rising Exchange Inflows Signal Caution
One of the most widely monitored on-chain indicators is exchange net position change. This metric tracks the net amount of XRP moving onto or off exchanges over a rolling 30-day period.
When the value turns positive, it means more XRP is being deposited to exchanges than withdrawn. Historically, this behavior is associated with rising sell-side pressure, as tokens moved to exchanges are often intended for trading or liquidation.
On February 3, this 30-day metric flipped back into positive territory, showing a net increase of roughly 396 million XRP held on exchanges.
At first glance, this appears bearish. More supply sitting on exchanges usually means higher potential selling pressure.
However, context matters. Exchange inflows alone do not tell us who is selling. To answer that question, we must look at holder age data.
HODL Waves Reveal Selling From Short-Term Holders
HODL Waves is an on-chain metric that categorizes XRP supply based on how long coins have been held in wallets. By grouping supply into different age bands, it becomes possible to identify whether short-term traders or long-term investors are driving market activity.
Recent HODL Waves data shows that the one-week to one-month holding cohort reduced its share of total supply from 5.27 percent to 3.6 percent since February 1. At the same time, the one-to-three-month cohort cut exposure from 11.53 percent to 9.29 percent.
These two groups represent some of the most speculative participants in the market. They tend to chase momentum and exit quickly when price fails to move in their favor.
Their declining share of supply suggests that much of the recent selling pressure is coming from weak hands rather than long-term investors.
This distinction is critical.
When long-term holders sell aggressively, it often signals a loss of conviction and can precede prolonged bear markets. When short-term traders sell, it more often reflects exhaustion after failed breakouts.
In many historical cases, heavy short-term holder distribution has occurred near local bottoms.
Long-Term Holders Continue to Accumulate
While short-term holders are reducing exposure, long-term XRP holders are quietly doing the opposite.
Hodler net position change, which tracks wallets holding XRP for more than 155 days, remains in positive territory. This indicates that long-term participants are still adding to their positions.
Although the pace of accumulation has slowed slightly in early February, the metric has not turned negative. This suggests that experienced investors continue to view current prices as attractive relative to long-term potential.
Long-term accumulation during downtrends is often associated with the early stages of basing processes. It reflects a belief that downside risk is becoming more limited compared to upside opportunity.
Cost Basis Data Identifies Emerging Support Zone
Cost basis heatmaps show the price levels at which large portions of XRP last changed hands. These clusters often become important support or resistance zones because many investors have a vested interest in defending their entry prices.
Recent data reveals a new accumulation cluster forming between $1.57 and $1.58. More than 520 million XRP have shifted ownership in this range over recent sessions.
This concentration of buying activity creates a developing support zone.
When price revisits such areas, buyers who entered previously may step in again, while sellers may be reluctant to push price below their cost basis. This dynamic can help slow or halt declines.
The presence of this cluster strengthens the argument that XRP is in a redistribution phase rather than a full-scale capitulation.
Redistribution Versus Capitulation
Understanding the difference between redistribution and capitulation is essential.
Capitulation involves widespread panic selling across all holder groups, including long-term investors. It is usually accompanied by extreme negative sentiment and sharp, high-volume selloffs.
Redistribution, on the other hand, occurs when supply shifts from short-term traders to long-term holders. Price may still fall or move sideways, but ownership becomes increasingly concentrated among investors with stronger conviction.
XRP’s current on-chain profile aligns more closely with redistribution.
Short-term holders are exiting. Long-term holders are accumulating. Cost basis clusters are forming. These are not the hallmarks of a market in freefall.
Bullish Divergence in Capital Flow
Momentum indicators provide another layer of insight.
Between late January and early February, XRP’s price trended lower while the Chaikin Money Flow (CMF) indicator trended higher.
CMF measures buying and selling pressure by analyzing price and volume. When CMF rises, it suggests that capital is flowing into the asset.
A bullish divergence occurs when price makes lower lows while CMF makes higher lows. This pattern indicates that selling pressure is weakening and that buyers are becoming more active behind the scenes.
CMF is now approaching the neutral zero line. A sustained move above zero would confirm that inflows are outweighing outflows and would strengthen the case for a trend reversal or at least a meaningful rebound.
Key Support Levels to Watch
Several price levels will play a decisive role in determining XRP’s next major move.
The most important support currently sits around $1.48. This level aligns with prior reaction lows and the lower region of the developing base.
If XRP breaks below $1.48 with strong volume, the base structure would be invalidated. In that scenario, price could slide toward $1.25.
Below $1.25, the next major downside target lies near $0.94. This level roughly corresponds with the projected breakdown target from the falling channel.
As long as $1.48 holds, however, the probability of a deeper collapse remains lower.
Resistance Levels and the Path to $1.70
On the upside, the first significant recovery barrier stands near $1.70.
This zone has acted as resistance during recent bounce attempts. A decisive reclaim of $1.70 would signal improving momentum and could trigger follow-through buying.
Above $1.70, the next key level is around $1.97. A breakout above $1.97 would represent a structural shift, turning XRP’s market structure from bearish to neutral.
If that occurs, the path opens toward the $2.42 region, which aligns with previous high-volume trading zones and psychological resistance.
Why a Bearish Metric Is Fueling Bullish Hopes
At face value, rising exchange inflows are bearish. But when paired with HODL Waves and long-term holder data, a different interpretation emerges.
Instead of long-term investors rushing to sell, it appears that speculative traders are capitulating. Their tokens are being absorbed by stronger hands.
This process often marks the transition from downtrend to consolidation and eventually to recovery.
In other words, the very metric that typically signals danger is, in this context, highlighting a healthy cleansing of weak hands.
What Could Invalidate the Bullish Case
No analysis is complete without acknowledging risks.
If long-term holder accumulation stalls and hodler net position change turns negative, it would suggest that conviction is weakening.
If CMF rolls over and falls back into negative territory, it would indicate that inflows are fading.
Most importantly, a decisive breakdown below $1.48 would significantly increase downside risk.
Traders and investors should monitor these signals closely.
Outlook for XRP in the Coming Weeks
XRP remains technically weak in the short term. The falling channel is still intact, and price has not yet reclaimed key resistance levels.
However, the combination of rising capital inflows, steady long-term accumulation, and emerging cost basis support suggests that downside pressure may be stabilizing.
As long as $1.48 holds and CMF continues to strengthen, a gradual push toward $1.70 remains a realistic scenario.
Rather than signaling imminent collapse, current on-chain data paints a picture of a market quietly building a foundation.
Patience will be required. But for those watching the data closely, the early ingredients of a potential trend shift are beginning to appear.
