XRP before the strong shift in sentiment: Could fear open up opportunities?

The price of XRP just broke through the $2 USD mark, marking a decline of approximately 19% from the peak recorded on 1/5/2026, causing concern among many investors. However, analysts still see positive signals that could pave the way for a recovery in the near future.

This article delves into the key factors behind this optimistic outlook, based on data from social media, trading activity, and the latest developments from cryptocurrency exchanges.

Retail investor sentiment turns pessimistic amid price correction

XRP recently experienced a notable psychological reversal.

Market Sentiment data from Santiment — a platform specializing in analyzing market emotions based on social media discussions — shows XRP has fallen into the “Extreme Fear” zone, in stark contrast to just a week earlier when the market was full of greed.

Santiment emphasizes that, historically, extreme sentiment often signals potential turning points. In fact, markets tend to move counter to the expectations of the majority of investors. “High levels of pessimistic comments like current levels often lead to price rallies because prices tend to operate contrary to retail investor predictions,” Santiment’s report states.

Positive/Negative Sentiment Ratio for XRP | Source: SantimentWhile this observation suggests a possible positive scenario, the rapid psychological volatility over a short period also indicates instability and inconsistency within the retail investor community. This instability makes it difficult to expect a sustainable upward trend.

###Negative funding rate in futures contracts signals a potential reversal pattern

Market data recently revealed an interesting reversal signal. A CryptoQuant analyst noted that negative funding rates in perpetual futures contracts reflect excessive accumulation of short positions.

The funding rate in futures contracts is a periodic payment between long and short position holders. When the funding rate is negative, it means short sellers are paying long holders — a rare but significant indicator. Historically, similar conditions often appear just before XRP price recoveries.

CryptoQuant data shows this pattern has occurred twice since 2024: in August–September 2024 and April 2025. In both cases, negative funding rates preceded significant price increases.

“Based on historical experience, the market often reacts opposite to late consensus. The accumulation of short positions creates short-term selling pressure but also compresses latent buying power. If the price begins to rise, these positions may be liquidated, fueling a strong rally,” CryptoQuant analyst Darkfrost commented.

XRP Funding Rate | Source: CryptoQuant## Technical outlook: XRP holds support amid mixed signals

The MACD(Moving Average Convergence Divergence) indicator remains below the signal line on the daily chart, confirming a short-term downtrend for XRP. The histogram bars expanding below zero may cause investors to remain cautious, reduce their positions, and add selling pressure.

The $1.90 support level remains crucial for XRP to maintain its upward momentum and approach the psychological threshold of $2.00. If this level is broken, key EMA levels will become important “barriers”: the 50-day EMA at $2.05, the 100-day EMA at $2.18, and the 200-day EMA around $2.30.

Daily XRP/USDT chart | Source: TradingViewHowever, the Relative Strength Index (RSI) is rising to 44 on the daily chart, indicating the downward momentum is gradually weakening. A sustained rally above 50 would be a clear sign of a trend reversal from bearish to bullish. Conversely, if XRP closes below the $1.90 support, selling pressure could increase, pushing the price down to Monday’s low of $1.85.

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