XRP plummets 20%, approaching the "life and death line"? Three major bearish pressures top out, can the $1 level still hold?

This week, XRP prices experienced a significant correction, with a seven-day decline of over 20%, dropping to a low of $1.53 at one point, marking a new low since November 2024. Although there was a slight rebound to around $1.60 in the short term, the current price has shrunk by approximately 56% from the peak of $3.65 last year, and market sentiment remains under pressure.

This downturn is not an isolated event. Over the past week, the overall cryptocurrency market declined by about 15%, with macroeconomic uncertainties and geopolitical tensions dampening investor interest in risk assets. Meanwhile, high-leverage long positions were heavily liquidated, with total market liquidations exceeding $500 million in the past 24 hours, including millions of dollars in XRP-related long losses, further amplifying volatility.

From a fundamental perspective, three major factors are weakening XRP’s support. First, XRP Ledger’s presence in the DeFi space remains limited, with only 19 protocols and a total locked value of approximately $54.6 million, down more than 30% since early January, indicating ongoing outflows of on-chain funds and activity. Second, the token burn rate has slowed significantly, with recent daily burn amounts only in the hundreds of tokens, far below last year’s peak levels, reducing deflationary effects. Third, capital inflows into spot XRP ETFs have cooled considerably, with net inflows in January of only about $15.59 million, far below the high levels at the end of last year, and waning institutional demand has diminished liquidity buffer effects.

Technically, the outlook is also bleak. The weekly chart shows XRP still in a downtrend, having broken multiple key moving averages. The $1.60 region has shifted from support to resistance. If this level is lost, the psychological barrier at $1 will become the next line of defense. A breakdown could see prices further decline toward around $0.78.

Under the confluence of multiple bearish factors, XRP faces a critical test. Its short-term trajectory depends on the speed of capital reflow and market sentiment recovery, and investors should remain highly cautious.