XRP Plunges 40%: A Comprehensive Analysis of On-Chain Data, Holding Fluctuations, and Key Price Level Trends

In the first quarter of 2026, the crypto market underwent intense restructuring amid macro volatility and structural adjustments. As one of the leading cryptocurrencies by market cap, XRP experienced a significant decline of about 40% from its January high of $2.35, after a regulatory victory and ETF listing frenzy in 2025. It once approached the $1.10 level. As of February 28, 2026, according to Gate data, XRP price stood at $1.34 USD, with a 24-hour trading volume of $74.22M USD and a market cap of $82.53B USD.

On the surface, this appears to be a destructive price collapse. However, deeper on-chain data and derivatives structures reveal that this drop is not simply the end of a bull market, but rather an extreme stress test of market resilience. This article will analyze the causal chain behind XRP’s decline, examine the key points of the bulls and bears, and, based on facts and data, project various possible scenarios for its evolution at current price levels.

Event Overview: Structural Divergence During Extreme Retracement

Since reaching a temporary high of $2.35 on January 5, 2026, XRP entered a downtrend, accelerating to lows in early February with a maximum retracement of nearly 40%. This decline far exceeded Bitcoin’s adjustment during the same period, highlighting its high Beta characteristics. Yet, a key market divergence emerged: price declines coincided with increased holdings by long-term investors.

On-chain analysis shows that the group of holders with over 155 days of holding increased their net position from about 47.3 million XRP to approximately 145 million XRP between January 5 and February 26, a 200% increase. Meanwhile, the supply controlled by addresses holding less than a week shrank sharply from 2.29% to 0.579%, a 74.7% reduction. This clearly depicts an internal market power shift: panic short-term capital exits, while long-term strategic funds quietly absorb supply.

Speculative Holders: Glassnode

Macro and Micro Resonance

This decline was not triggered by a single black swan event but resulted from multiple pressures resonating within the same timeframe.

• Macro Transmission (early February): Weak US employment data and concerns over global trade tariffs triggered widespread risk asset sell-offs. Bitcoin broke below the $60,000 psychological level, putting pressure on XRP, which is more sensitive to liquidity.
• Leverage Collapse (Feb 1–2): The market experienced what’s called Black Sunday II—a deleveraging event. In less than 48 hours, over $2.2 billion in futures positions were forcibly liquidated across the network. XRP dropped 10% over the weekend, with peak daily liquidations exceeding $150 million. The large-scale unwinding of high-leverage longs served as the first accelerator of the decline.
• ETF Inflow Vacuum: Although US XRP spot ETFs initially attracted substantial funds, weekly inflows in February dropped to the lowest since listing. The absence of institutional buying removed a key support level for prices.
• Technical Support Breach: After falling below the $1.60 demand zone from April 2025, technical sell-offs and stop-loss triggers drove prices further down to the $1.10–$1.20 range, seeking liquidity.

From Fragility to Steady State

Understanding XRP’s current state hinges on analyzing the underlying changes in its market structure data.

First, the detoxification in derivatives markets. The sharp decline cleared excessive leverage risk. XRP’s estimated leverage ratio on platforms like Binance dropped sharply from above 0.60 mid-2025 to about 0.16, indicating a significant reduction in overall market fragility. The current XRP perpetual contract market shows relatively balanced long and short leverage (around $74.93M long vs. $69.14M short), contrasting with Ethereum’s severe imbalance (roughly $976M long vs. $576M short), suggesting the risk of a one-sided squeeze has diminished.

Second, the rebalancing of spot supply and demand. Panic selling often involves realized losses. Data shows that during this decline, XRP’s realized losses surged to approximately $908 million—the highest since the lows of 2022—indicating a phase of seller exhaustion. Meanwhile, although exchange reserves fell to multi-year lows, large whale addresses continued to flow into exchanges, hinting that major players are either absorbing sell pressure or preparing for future moves.

Contrasting Despair Narratives and Calm Accumulation

Market sentiment during the price plunge shows a stark binary split.

Mainstream views attribute the decline to macro headwinds and regulatory uncertainty. Some traders see this as a natural correction after Ripple’s partial legal victory in 2025, with a weakening 30-day correlation suggesting the asset faces its own structural risks. Fear, uncertainty, and doubt spread widely, with social media sentiment plunging the Fear & Greed Index to 9, indicating extreme panic.

Conversely, an on-chain data-driven contrarian view is emerging. Analysts like STEPH IS CRYPTO argue that the leverage collapse has effectively washed out weak hands. This perspective sees the current market as having transitioned from speculation-driven to spot accumulation-driven. The inflow of nearly $1.2 billion into XRP spot ETFs, contrasted with retail panic selling, is viewed as smart money building positions amid noise.

Does Increased Holding Signal Bullishness?

The 200% increase in long-term holders is the most notable narrative. Factually, this data accurately reflects on-chain address behavior. However, caution is needed when interpreting it as a purely bullish signal.

XRP Holders: Glassnode

• Hypothesis 1: Strategic demand vs. passive holding. The increased addresses may include not only active bullish investors but also entities allocating assets for Ripple ecosystem projects, market making, or DeFi applications. Not all of this accumulation is aimed at short-term price rallies; some reflect fundamental investment in the ecosystem’s long-term development.
• Hypothesis 2: Inevitable result of capitulation selling. When speculative supply drops from 2.29% to 0.58%, passive long-term holdings naturally rise. The core significance of this data is confirming the degree of market cleansing, not an immediate price rebound.
• Hypothesis 3: Price and accumulation lag. Historical experience shows large whale accumulation often occurs at cycle bottoms, but accumulation alone does not guarantee an immediate rebound. Price recovery still depends on macro liquidity improvements or new ecosystem catalysts.

Alternative Proofs of Market Maturity

This deep correction in XRP may, from an industry perspective, actually demonstrate its market maturity.

First, it tests the limits of the US XRP spot ETF as a buffer. With ETF inflows slowing, the market has relied on self-corrective mechanisms—deleveraging and re-pricing—more healthily than depending solely on institutional support. Second, it shows the crypto market’s self-healing capacity: large-scale deleveraging, though painful, effectively clears systemic redundancies, laying a foundation for healthier future rallies. Lastly, Ripple’s ongoing diversification strategies for XRP Ledger and the FinTech Builder program indicate ecosystem development continues despite price volatility, reinforcing long-term value.

ETF Fund Flows: SoSo Value

Scenario Evolution and Projections

Based on current facts and logic, XRP’s future evolution could follow these scenarios:

• Scenario 1: Structural Bottoming, Gentle Recovery
  • Basis: Deleveraging, balanced leverage, long-term accumulation.
  • Projection: Price consolidates in the $1.30–$1.50 range, with decreasing volatility, mainly tracking Bitcoin and macro risk sentiment. Resistance levels at $1.42 and $1.52 (cup-and-handle neckline). A successful break above $1.52 could target $1.70–$1.71.
• Scenario 2: Catalytic Reversal, Trend Rebound
  • Basis: Continued institutional inflows, new ecosystem developments, clearer macro policies.
  • Projection: If Bitcoin stabilizes and XRP ETF inflows accelerate again, or Ripple achieves major cross-border payment partnerships, market sentiment could reverse swiftly. Breaking above $1.81 could trigger a short squeeze, pushing toward $2.00 and even the previous high of $2.35.
• Scenario 3: Macro Deterioration, Liquidity Trap
  • Basis: Ongoing global risk aversion, regulatory black swans.
  • Projection: If global markets enter a risk-off phase due to stagflation or geopolitical conflicts, crypto assets will face continued pressure. Losing key support at $1.31–$1.30 could deteriorate technicals, with potential retest of February lows around $1.11–$1.12.

Conclusion

The fact is, XRP has undergone a severe deleveraging, with prices retracing sharply and market structure being reshaped. Long-term holders and short-term speculators are exhibiting historically divergent behaviors. Some interpret this as healthy bottoming after weak hands are washed out, while market sentiment remains broadly pessimistic. Others see XRP at a critical crossroads.

In the short term, price movements depend heavily on macro liquidity and Bitcoin’s performance, making precise forecasts difficult. But in the medium to long term, a market with lower leverage and a more solid holder base provides a firmer stage for the next phase of value discovery. For investors, current decision-making involves weighing market resilience against macro uncertainties.