Amid the recent XRP recovery push, market participants have continued to question if this is finally the start of a trend reversal or a brief relief rally.
Notably, XRP opened 2026 with bullish momentum after a rough end to last year. Following the 35% crash in Q4 2025, the crypto asset has bounced sharply in early January 2026. The recovery has already lifted XRP by nearly 30%, pushing it back above $2, with the broader market also rebounding considerably.
However, the upsurge has led to questions. For instance, some traders believe XRP may finally be turning bullish. Others think this push resembles a relief rally within a larger downtrend. Amid these questions, market analyst Blockchain Backer shared why he believes investors should be cautious.
Long-Term Charts Show Warning Signs Instead of Strength
The analyst first considered XRP’s weekly and monthly charts, which he says are important for understanding the trend. Notably, on the weekly timeframe, XRP formed a bearish divergence that pushed the MACD to new lows.
The price stayed stable overall, but this stability came with noticeable weakness compared to May, June, and July 2025. However, with the latest upward push, weekly data shows the MACD curling upward again, and the Stochastic RSI turning higher as well.
Meanwhile, on the monthly chart, the conditions look more troubling. Notably, the MACD recently crossed lower in a pattern similar to February 2022, a period that led to deeper losses. The monthly RSI also fell sharply, landing below last summer’s levels. In addition, the monthly Stochastic RSI continues to point down.
As both weekly and monthly indicators enter levels from past periods when XRP faced breakdowns, Blockchain Backer believes traders should stay cautious instead of celebrating too early.
The analyst noted that this current situation resembles a pattern he has tracked for years. For context, the pattern typically involves a rally that appears right before capitulation.
He highlighted how the crypto market behaved the same way in May 2021, when the altcoin market hit a 4.236 Fibonacci extension, Bitcoin retraced to 0.702, and hype peaked during a high-profile weekend. This moment marked the top, not the start of a new run.
XRP Price Action Still Resembles a Market Near Capitulation
Speaking further, Blockchain Backer compared the current XRP structure to examples like Hedera Hashgraph (HBAR) and Cardano (ADA), both of which climbed temporarily before breaking lower again.
While the behavior is similar, the question now is how high the current rally could go before the pullback emerges. He believes XRP might rally toward $2.27 to $2.30, though this remains uncertain. In addition, Bitcoin could stretch toward levels that mirror $2.50 on XRP’s chart if history repeats.
The analyst noted that XRP invalidated a clean ABC corrective pattern when it fell below $1.82 on Dec. 18, and this led to more uncertainty about how high this rally can rise. Because of that break, he expects this may be the final rally that requires heavy caution before market conditions improve later in 2026.
A Possible Drop Ahead Before a Healthier Market Emerges
Essentially, he believes the charts point toward a capitulation event, though he cannot predict exact levels. He mentioned that XRP might fall near $1.60, or possibly lower, but stressed that nothing guarantees a drop to a specific price.
Blockchain Backer also warned that relief rallies often draw investors back in at the wrong moment. Notably, green candles lead to optimism, and many assume the bull market has returned. If the rally fades, those same traders could face the burn as price reverses again.
However, his outlook could change only if XRP breaks convincingly above $3.20 to $3.30. Until then, he confirmed plans to watch for signs of exhaustion. If capitulation finally arrives, he believes the market will reset and create room for a stronger recovery later in 2026.
Shortly after his analysis, XRP soared to $2.41 but has since pulled back slightly to the current price of $2.25, with the upward momentum slowing down. Interestingly, Dom, another analyst, also argued that the latest rally did not come from aggressive spot buying.
DisClamier: This content is informational and should not be considered financial advice. The views expressed in this article may include the author's personal opinions and do not reflect The Crypto Basic opinion. Readers are encouraged to do thorough research before making any investment decisions. The Crypto Basic is not responsible for any financial losses.
