Ripple (XRP) traders are quickly turning bearish: history says this could be bullish

XRP has fallen 19% since January 5, sending the retail industry into extreme fear territory.

The pullback was amplified by market uncertainty, as rising geopolitical tensions pushed investors into a more defensive mode. As a result, XRP sentiment appears to be collapsing quickly. But it is important to note that periods of extreme bearish chatter have been followed by rebounds and unexpected moves.

Ripple’s next battle zones

In the latest update, Santiment said XRP has entered ‘Extreme Fear’ territory based on its social data, as small retailers have turned pessimistic following a 19% decline from the January 5 high. The analytics firm added that historically, heavy bearish commentary has often been followed by rallies, and prices often move opposite to retail expectations.

“XRP Traders Are Showing Big FUD, Which Is Usually A Rally Starter.”

Furthermore, crypto analyst Ali Martinez also identified crucial price levels to monitor for XRP. He pointed to $1.78 as a key support zone. If the asset manages to breach this level, the next major resistance zones will be at $1.97 and $2.

Distribution phase

XRP is currently trading about 47% below its all-time high in July 2025, after an extraordinary 600% rally since November 2024. explained that the market naturally entered a phase of distribution and correction, which is considered a healthy adjustment. The current bearish sentiment is unusual in that it emerged after the price had already fallen more than 50%, and not at the peak.

On Binance, XRP funding rates have been largely negative since December, meaning leveraged short positions now dominate the market. Previous examples show that markets often move against the late consensus, meaning that heavy short positioning can create both short-term selling pressure and latent buying pressure.

If the price of XRP starts to rise, these short positions could be forced to close, which would fuel upward momentum. Similar patterns occurred twice since 2024. During the August-September 2024 period and the April 2025 correction, XRP funding rates turned negative for a time, followed by bullish rebounds as investor sentiment turned and funding rates returned to positive levels.

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As such, analysts believe that the current setup could signal a potential turnaround for the crypto asset as buying pressure begins to build.