Whale distribution and a convincing bearish reversal indicator have sent XRP price further down in early 2025.

XRP price has increased by more than 300% in the past two months and was trading at $2.10 on December 27. However, warning signs suggest that XRP/USD could erase at least 25% of those gains in the short term.

XRP Nears Descending Triangle Breakout

The recent losses came as its price traded within a descending triangle pattern, a bearish structure that often signals further decline.

This pattern is defined by a series of lower highs forming the descending trendline of the triangle, while the $2.10 level acts as horizontal support.

A decisive break below the $2.10 support level could open the door for a deeper correction. The potential downside target for this breakout is calculated by subtracting the height of the triangle from the breakout point, according to technical analysis rules.

In other words, the price of XRP could drop to around $1.64 by January 2025, a drop of about 25% from its current price.

XRP whales sell

On-chain data continues to support the bearish outlook, with whale address tracking figures indicating a distribution sentiment.

Notably, the supply of XRP held by the richest investors — those with a balance of more than 1 million tokens — has decreased by 180 million since the beginning of December.

Meanwhile, the supply held by entities with a balance of 100,000 XRP decreased by 170 million. The decrease in supply for both groups of addresses matches XRP's price drop of more than 26% from its local peak of $2.90.

Large-scale whale sales can put downward pressure on prices due to the increased circulating supply of tokens. Combined with the price drop, this suggests that selling activity has overwhelmed demand.

XRP Supply on Binance is Increasing

Additionally, XRP reserves on Binance, the largest cryptocurrency exchange by volume, have been steadily increasing since mid-December, which is typically a bearish signal as it often precedes a price correction.

The surge in foreign exchange reserves further reinforces the narrative of profit-taking at local highs, contributing to XRP’s ongoing bearish momentum.

Unless this trend reverses, the $XRP price could face a 25% downside risk as supply on exchanges increases and large holders continue to sell off.