XRP Price Analysis: 20% Correction Expected Before Next Rally

XRP has surged nearly 26% over the past week, currently trading at $2.93 after briefly touching $3.01. Despite the bullish momentum, on-chain data suggests a short-term correction may be imminent. Rising whale transactions and increasing exchange reserves create conditions similar to previous local tops, indicating a potential 20% price drop before XRP resumes its upward trajectory.

Exchange Reserves Signal Potential Selling Pressure

XRP exchange reserves on Binance have reached their highest level at 2.96 billion tokens since January 2025, creating conditions for potential selling pressure. Historical data from CryptoQuant shows the last time reserves spiked this high was in May 2025, when XRP traded around $2.54. That period preceded a 20% correction, with the token falling to $2.01 over subsequent weeks.

Rising exchange reserves typically indicate more tokens being moved to exchanges, often preceding sell-offs. The current trend mirrors the May peak, increasing the likelihood of a short-term XRP price cooldown.

Whale Activity Reaches Three-Month High

XRP whale transactions exceeding $1 million have surged to their highest level in three months, supporting the correction thesis. Historically, spikes in high-value transfers have preceded distribution phases and price corrections, where large holders offload positions at local tops.

The timing of increased whale activity aligns with the exchange reserve spike, strengthening the bearish argument for a near-term price correction.

Technical Analysis Points to $2.34 Target

From a technical perspective, XRP's recent move from $1.90 swing low to $3.03 high places the 0.618 Fibonacci retracement level at $2.34. This critical zone often acts as a magnet during market consolidations or corrections.

A drop from the current XRP price of $2.93 to $2.34 would represent exactly a 20% correction, consistent with the May decline following a similar exchange reserve spike.

Key Support and Resistance Levels

Immediate short-term support sits at:

• $2.80 (standard support line)

• $2.77 (0.236 Fibonacci level)

These levels have provided solid footing during previous pullbacks. A break below these support zones could accelerate downside momentum toward the $2.34 Fibonacci target.

Bullish Scenario Invalidation

The bearish scenario would be invalidated if XRP holds above $2.77 while exchange reserves begin declining. This would indicate renewed accumulation rather than distribution.

If the token maintains support and whale selling subsides, bullish momentum could resume, potentially pushing XRP price back toward retesting the $3.03 level.

Market Outlook

While XRP has shown impressive gains recently, on-chain metrics suggest caution in the short term. The combination of elevated exchange reserves and increased whale activity creates conditions similar to previous local tops.

Traders should monitor the $2.77 support level closely, as a break below could trigger the anticipated 20% correction to $2.34. However, holding above this level with declining exchange reserves could signal continued upside potential.

The cryptocurrency market remains volatile, and these technical and on-chain indicators should be considered alongside broader market conditions and fundamental developments affecting XRP.