XRP has seen a significant drop in value, currently trading at $1.94 after peaking at $2.39 on January 6, 2026. This decline reflects a 39.3% decrease from January 2025 and has placed the token firmly within the “extreme fear” zone, as retail sentiment takes a hit. The bearish atmosphere has traders bracing for what comes next.
The recent market activity coincides with a broader correction affecting many cryptocurrencies. Bitcoin, which soared to $97,000 on January 15, has since retreated below $90,000, a trend that XRP has followed closely. This fall isn’t entirely unexpected, especially considering the geopolitical backdrop triggered by former President Donald Trump’s tariffs related to Greenland, which initially spooked the market.
Despite Trump’s subsequent cancellation of those tariffs, which gave the market a momentary breath of relief, XRP continues to suffer from negative sentiment on the trading floors. Investors appear hesitant, with many actively seeking safety in precious metals rather than cryptocurrencies, as revealed by the short-lived dips in gold and silver prices.
Extreme Fear Zone Signals Potential Reversal
Recent analysis from Santiment indicates that XRP’s sentiment ratio dropped below 1.873 on January 20, marking a growing sense of anxiety among retail investors. However, historical data suggests that entering the “extreme fear” zone often precedes impending price increases. In fact, XRP has a history of experiencing rallies after such sentiment dips, previously achieving notable gains during similar downturns.
For instance, following a sharp decline in December, XRP surged 29% to hit $2.41 shortly thereafter. Such patterns have prompted many traders to adopt a buy-the-dip strategy during times of extreme fear, raising hopes for a rebound.
ETF Outflows Pressure XRP Value
In a further blow to XRP’s price stability, US spot XRP ETFs recorded net outflows of $53 million on January 21, indicating institutional investors are pulling back from XRP products. While this outflow puts additional pressure on the token, it’s worth noting that XRP registered a 3.1% gain over the past month, indicating resilience amidst adverse conditions.
Despite recent turbulence, CoinCodex projections suggest that XRP could climb to $2.15 by February 13, albeit with expected corrections likely returning it to near-current levels by the end of the month. The sentiment among traders, however, remains cautious and bearish, as XRP trades 19.2% below its early 2026 peak.
As the market grapples with these challenges, the sentiment surrounding XRP’s potential recovery may hinge on upcoming developments and reactions within the broader crypto environment. All eyes will be on whether history can repeat itself as traders look for buy-the-dip opportunities amidst the prevailing fear.
