$XRP price is edging closer to losing a key trendline support that has historically served as a strong floor, from which previous rebounds have often begun.

According to data from crypto.news, $XRP ($XRP) price was off to a strong start for this year, rallying nearly 30% from Jan. 1 to $2.39 on Jan. 6 amid a market rebound across all cryptocurrencies, especially owing to the January effect that played a key role.

However, as is common with most other cryptocurrencies that experienced similar double-digit surges, it lost part of these gains as investors began profit-taking. The cooling sentiment intensified as expectations of a hawkish Fed policy sent the market back into fear mode. At press time, $XRP price was trading at $2.06, down 13.6% from last week’s high.

With traders now scaling back bets on interest rate cuts for the first half of 2026, the fifth-largest cryptocurrency is testing critical demand zones near $2.00 to see if bulls can maintain their grip on the short-term trend.

The daily chart shows that a drop below $2 would risk losing a key multi-month descending trendline that it recently turned from resistance to support. Additionally, $2 has served as a horizontal trendline support multiple times since December 2024, making it a very crucial psychological and technical floor for the asset.

$XRP price is testing the $2 support level.">

$XRP price is testing the $2 support level — Jan. 13 | Source: crypto.news

At press time, momentum indicators showed signs that bears were at an advantage. Notably, the MACD line was at the brink of forming a bearish crossover with the signal line, while the RSI had formed a bearish divergence as it dropped from overbought levels to touch the neutral threshold.

As such, a sharp drop below $2 could trigger further downside to meet the December low at $1.77, which is down nearly 14% from the current price. However, if bulls manage to push $XRP price past the $2.2 psychological resistance level, the bearish setup would likely be invalidated.

Bullish fundamentals still at play

Despite the bearish prediction, it must be noted that $XRP price still has multiple catalysts building in the background.

For one, data from DeFiLlama shows that the stablecoin supply on the $XRP Ledger network has increased by over 10% in the past seven days, largely driven by the growth of Ripple USD (RLUSD), which recently crossed a $1.3 billion market cap.

A stronger stablecoin supply means more liquidity for decentralized finance protocols on the chain, which in turn could boost the utility of $XRP as a bridge asset for these transactions.

Also, demand for spot $XRP ETFs, while having one weaker period of late, has persisted since their launch. These investment vehicles now hold $1.23 billion in net inflows since their debut.

As institutional demand for regulated crypto exposure continues to build, it could also drive follow-through demand from retail investors who view these inflows as a sign of long term stability, potentially boosting the token’s price over the longer run.