XRP pulls back from high levels amid whale activity, can the $2 support level hold the key?

XRP has recently experienced a rapid surge followed by a noticeable correction, with market focus on whether the key support level at $2 can hold. As of now, XRP is trading at $2.14, down about 5% in the past 24 hours, but still up 17% over the past 7 days. Interestingly, while retail investors become more cautious, on-chain whale transaction activity has risen to a three-month high. This divergence adds uncertainty to the short-term trend.

The Logic Behind the Price Correction

XRP is currently in a typical high-level consolidation phase. Over the past month, it has gained 3.6%, with price fluctuations mainly between $1.83 and $2.39. Compared to the July peak of $3.65, XRP has retraced about 41%, indicating that the overall recovery process is still incomplete.

From trading and derivatives data, sentiment is indeed cooling. 24-hour spot trading volume has fallen 34% to approximately $4.29 billion, derivatives trading volume has decreased 39% to $7.38 billion, and open interest has declined 6% to $4.15 billion. The simultaneous decline in volume and open interest is significant; it usually suggests traders are taking profits after the rally rather than adding to their positions.

What Are the Whales Doing?

Contrasting with retail caution, large on-chain addresses are very active. According to Santiment data, on December 9, there were 2,802 whale transactions exceeding $100,000 on the XRP network, reaching a three-month high. Such anomalies often accompany increased price volatility; historical experience suggests they should not be ignored.

More interestingly, some well-known whale addresses have recently opened new long positions in XRP, holding about 727,433 tokens (roughly $1.69 million) with an average entry price of $2.09, currently showing unrealized gains. This indicates that major holders remain confident in XRP’s medium-term prospects.

New Variables on the Supply Side

On January 5, Ripple unlocked and transferred about 300 million XRP, worth approximately $652 million, according to its scheduled escrow mechanism. While this is a routine operation, in the current sensitive price environment, it could add to selling pressure.

Additionally, changes in exchange reserves are noteworthy. Currently, exchanges hold about 1.6 billion XRP, less than half of their previous high. Lower exchange reserves can amplify price swings during demand fluctuations, which may be a double-edged sword for short-term trends.

Fundamental Positive Signals

On the fundamentals side, there are several positive signs. Ripple executives recently confirmed that XRP has established its legal status as a non-security digital asset through a court ruling in the US. This clears regulatory hurdles for XRP’s long-term development.

Moreover, inflows into XRP spot ETFs continue. Reports indicate that institutional investors such as Grayscale, Franklin Templeton, Canary, and Bitwise have collectively added over $1.25 billion in net inflows into XRP spot ETFs, reflecting sustained institutional interest. Ripple is also expanding the use of its stablecoin RLUSD across more blockchains via Wormhole, highlighting progress in cross-border payments applications.

Key Technical Levels

From a technical perspective, XRP broke through the $2.10–$2.15 range and entered a consolidation phase, which now acts as short-term support. If the daily chart can stay above $1.96, the bullish trend may continue; resistance is concentrated around $2.26, and a breakout above that could bring the $2.40–$2.50 zone back into focus.

Conversely, if it falls below $2, the correction target could be around $1.85 or even $1.66.

Summary

XRP is at a critical juncture after its rally. The profit-taking pressure among retail investors contrasts sharply with whale accumulation activity, making the $2 support level a key short-term variable. Fundamental improvements—regulatory clarity, ETF demand, and expanding applications—support the medium-term outlook. However, shrinking trading volume and declining exchange reserves could amplify short-term volatility. Going forward, it is crucial to monitor whether the $2 support can hold and whether whales continue to accumulate or start to reduce their holdings.