XRP is showing early signs of stabilization after a sharp six-day sell-off, but deteriorating macroeconomic conditions and political uncertainty continue to threaten its recovery.
The cryptocurrency has lost approximately 17% over the past week, making it the second-worst performer among the 10 largest cryptocurrencies by market cap, behind Zcash (ZEC).
Despite the negative backdrop, XRP’s daily RSI has reached deeply oversold levels, suggesting that a temporary recovery toward $1.20 remains possible.
However, analysts caution that such a rebound may not signal the end of the broader downtrend, with the cryptocurrency still facing the risk of falling below $1.
Muted institutional hinders XRP’s recovery
XRP has been underperforming in recent days amid muted institutional participation. According to SoSoValue, XRP ETFs recorded no inflows or outflows on Wednesday, indicating that institutional investors are not increasing their exposure to the funds.
This comes after ETFs recorded $10 million in net outflows on Monday, marking their biggest single-day withdrawal since March 2026. The ETFs also lost over $7 million on Tuesday, bringing the total weekly outflow to $17.6 million.
Macroeconomic developments have added another challenge for XRP as investors respond to stronger-than-expected US inflation figures.
The latest Consumer Price Index report has increased concerns that inflation remains elevated, potentially forcing the Federal Reserve to maintain a restrictive monetary policy stance.
According to CME Group’s FedWatch data cited in the report, traders now assign a 15% probability to a 50-basis-point interest rate increase at the December policy meeting.
Although the probability remains relatively low, the emergence of expectations for a larger rate hike reflects growing concern about inflation.
The Crypto Fear and Greed Index has fallen to 26, placing the market firmly in fear territory.
The reading suggests that investors are increasingly cautious about holding cryptocurrencies amid concerns about monetary policy and regulatory developments.
Until these uncertainties begin to ease, XRP could struggle to establish a sustained recovery.
XRP technical outlook: Oversold RSI signals potential rebound to $1.20
XRP’s technical indicators suggest that a short-term recovery could emerge following its recent decline.
On the daily chart, the cryptocurrency has reached the midpoint of its second bullish fair value gap (FVG), an area that previously attracted buying interest.
For XRP, the current FVG represents an important support area that could determine whether the cryptocurrency stabilizes or extends its decline below $1.
Momentum indicators also point to the possibility of a rebound. The daily Relative Strength Index (RSI) has entered deeply oversold territory following six consecutive days of selling pressure.
An RSI reading below 30 typically indicates oversold conditions, although cryptocurrencies can remain oversold for extended periods during strong downtrends.
If XRP successfully defends its current support area, buyers could attempt to push the cryptocurrency toward the $1.20 resistance level.
A sustained move above this level would suggest that buying momentum is improving. However, the more important resistance stands near $1.35.
XRP would need to reclaim this level over the coming weeks to strengthen the case for a broader bullish reversal.
XRP/USD Daily Chart
The downside risk remains substantial if XRP fails to defend its current support zone. The psychological $1 level represents an important threshold for traders monitoring the cryptocurrency’s near-term direction.
A decisive breakdown below this area could accelerate selling pressure and expose XRP to a deeper correction.
The key support below $1 lies at $0.98. A daily candle close below this support level would be brutal for XRP, as it would expose lower demand zones around the $0.80 mark.
For now, XRP’s deeply oversold RSI suggests that a temporary rebound could develop before sellers attempt another move lower.
AI disclosure: AI tools assisted with research and drafting of this piece. An Invezz editor reviewed the facts, sources and wording before publication. Any opinions or analysis are Invezz’s, not those of an automated system.
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