XRP's $2 Support at Risk: 40% Drop Ahead?

In a twist that might surprise even the most seasoned crypto traders, the underlying on-chain data suggests that XRP's rally could be on the brink of a significant reversal. If the $2 support level fails, XRP isn't just facing a minor dip; it's staring down the barrel of a potential 40% plunge.

Let's dive into the numbers. Over the past month, XRP's transaction volume has noticeably declined. According to data from Dune, the average daily transaction volume has dropped by 23% since November 15, 2025. This isn't just a blip on the radar; it's a trend that's been steadily building. And it's not just volume; the number of active addresses has also seen a 15% decrease over the same period, signaling a loss of interest from the broader community.

Technical analysis further supports the ominous outlook. XRP's Relative Strength Index (RSI) has been hovering around the 40 mark, a level that often precedes a bearish move. The moving averages are also beginning to cross in a death cross pattern, with the 50-day moving average about to dip below the 200-day moving average. These indicators, when combined with the declining on-chain metrics, paint a picture of an asset struggling to maintain its ground.

But what's driving this potential collapse? One factor could be the recent regulatory scrutiny XRP has faced. On December 8, 2025, the SEC announced a renewed investigation into XRP's classification as a security, causing a ripple of uncertainty through the market. While the immediate impact was a slight dip, the sustained pressure could be eroding investor confidence.

To add another layer to this puzzle, a closer look at the transaction data reveals a concerning pattern. Large holders, often referred to as 'whales', have been quietly offloading their XRP holdings. According to DefiLlama, over the last week, there's been a noticeable increase in transactions exceeding $1 million, with the majority being sell orders. This suggests that those with significant stakes in XRP are preparing for a potential downturn.

As we piece together this narrative, it's clear that the $2 support level is more than just a number; it's a psychological threshold that, if breached, could trigger a cascade of selling pressure. The question then becomes, what happens if it does break? The implications are far-reaching. A 40% drop would not only affect XRP holders but could also ripple through the broader crypto market, impacting sentiment and potentially leading to a broader sell-off.

One expert, who wished to remain anonymous, offered a stark assessment: 'If XRP loses $2, it's not just a technical level; it's a signal to the market that the rally is over. Investors need to be prepared for a significant correction.'

Yet, amidst this dire forecast, there remain unanswered questions. Can XRP recover its momentum? What will be the impact of the SEC's ongoing investigation? And how will the market react if the $2 support indeed collapses? These are the puzzles that traders and analysts will be grappling with in the days to come.