The price of XRP has fallen nearly 40% since January 5, falling from $2.35 to around $1.40. A move of this magnitude typically causes panic selling and causes long-term damage to market structure. But this time, something completely different happened.
Instead of accelerating the decline, one group of holders kept calm while another, less enterprising group quietly left. At the same time, leverage remained balanced and institutional investor flows remained positive. Taken together, these signals suggest that XRP’s collapse may have strengthened its foundation rather than breaking it.
The collapse of speculative holders — removing the biggest source of selling pressure
One of the most important changes in XRP’s decline was the withdrawal of speculative holders, as measured by the HODL Waves metric, which segments cohorts by time. These are short-term traders who typically hold for a day to a week and tend to sell quickly during times of volatility.
As of February 8, these short-term holders controlled 2.29% of the total supply of XRP. By February 26, this number had plummeted to just 0.579%. This means that the speculative supply share has decreased by 74.7% within three weeks. Meanwhile, prices have fallen.
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This type of flash is important because speculative holders often create continued selling pressure during a rebound. Their withdrawal eliminates supply instability and stabilizes prices. Simply put, the weak hands are already gone. This reduces the risk of panic-induced crashes on future pullbacks.
However, strength cannot be created simply by removing weak holders. The more important question is whether the strong holders will also remain.
Long-term holders remain strong even though XRP price falls by 40%
While the XRP price crashed, long-term holders behaved very differently.
The Hodler Net Position Change indicator tracks whether investors who have held for at least 155 days are buying or selling over a 30-day period. These holders typically accumulate during market downturns and are therefore considered to be the most informed participants.
On January 5th, when XRP was trading near $2.35, long-term holders were adding approximately 47.3 million XRP each month. By February 26th, when XRP fell to around $1.40 (a 40% decline), the net position change increased dramatically to around 145.45 million XRP (a 200% rise).
This means that the largest and most patient holders have increased their exposure while prices have collapsed, the opposite of panic behavior.
More importantly, their holdings have remained stable even though XRP has fluctuated between $1.21 and $1.52 since mid-February. We did not reduce our exposure during times of volatility. This stability sends a strong signal. This suggests that investors with the highest convictions are not treating the crash as a reason to exit. In fact, it appears to be poised for a future recovery.
This creates a stronger holder base. However, price stability also largely depends on the positioning of derivatives.
XRP’s Balanced Leverage Attenuates Maximum Crash Risk
One of the main reasons for the acceleration of the cryptocurrency crash is excessive leverage imbalance. If too many traders take the same position, forced liquidations will amplify the price movement.
Ethereum currently clearly illustrates this risk. Binance’s ETH/USDT perpetual contract has short leverage of $576 million, while long leverage is nearly $976 million. This creates significant downside liquidation risk if the price falls.
The positioning of XRP seems to be very different.
On Binance, XRP perpetual contracts are showing around $74.93 million in long leverage and $69.14 million in short leverage. It is almost perfectly balanced on the same time frame as ETH.
This balance is important. This means that XRP does not have a large cluster of overleveraged buyers that can be wiped out during a downturn. At the same time, it also avoids overcrowded short positions that can destabilize prices.
Balanced leverage creates a healthier structure. This allows prices to fluctuate more based on actual demand rather than forced liquidations. This healthier position is also reflected in institutional flows and technological structures.
Institutional Flows and XRP Price Structure Pave the Way to $1.70
Although many major crypto assets experienced weak ETF demand in February, XRP-related investment products continued to attract steady inflows. This shows that institutional investor participation did not collapse during XRP’s decline. No major net outflow weeks were recorded for investment products linked to XRP
Inflows from institutional investors are important because they represent long-term capital. Unlike speculative traders, financial institutions typically do not react to short-term volatility. Their steady participation helps stabilize the market during uncertain times.
Combined with strong holder behavior and balanced leverage, XRP’s recovery base is strengthened. These structural improvements are now consistent with key technical settings.
On the 8-hour chart, XRP appears to be forming a cup-and-handle pattern. This is a bullish continuation structure that often appears before an upward breakout. The handle formed after XRP corrected around 7% from its recent February 25 high, creating a consolidation zone.
This structure defines the major levels to come. If XRP sustains above $1.38, the bullish structure will remain in place. If it falls below this level, the momentum will weaken.
A break below $1.31 will completely invalidate the bullish pattern. On the upside, XRP will first need to rise above $1.42 to confirm a breakout of the handle. The more important breakout level is $1.52, located near the neckline of the cup-and-handle pattern.
If XRP moves above $1.52, the technical prediction would point to around $1.71 ($1.70 zone). In a stronger breakout scenario, the move could extend to $1.86 depending on the strength of the breakout and where the neckline is broken.
For now, the collapse of XRP may have caused an unexpected situation. That could have made the asset structurally stronger rather than weaker.
