Can XRP Avoid Another 25% Drop as the Overbought Signal Reappears?

XRP’s daily Stochastic RSI has entered overbought territory, a level that has preceded average price drops of 25% throughout 2025. This indicator, which measures momentum by comparing the RSI to its recent range, has been a reliable warning of sharp reversals when it begins to unwind.

The last time XRP’s Stochastic RSI reached these levels, the coin suffered a drop of over 45%. With the same pattern now flashing, traders are watching closely for signs of a correction in the days ahead.

Despite the technical warning, some analysts argue that market structure remains fundamentally bullish, with key support levels and institutional interest providing a potential backstop.

Technical Patterns Point to Volatility as Symmetrical Triangle Compresses Price

XRP is currently compressing within a symmetrical triangle, with price action nearing the apex and a decisive breakout appearing imminent. The critical breakout range lies between $2.20 and $2.25; a move above this could trigger a fresh impulse toward higher Fibonacci targets.

However, if support near $2.05 fails, XRP could revisit lower zones around $1.94 or even $1.60, echoing the magnitude of previous drawdowns seen after similar overbought signals.

The confluence of daily and 4-hour chart compression strengthens the likelihood of a major swing in either direction this July.

With the Stochastic RSI signal looming, traders should brace for heightened volatility as the market seeks a new direction.

Did you know?
The Stochastic RSI, first introduced in the 1990s, is a momentum indicator that often signals major turning points in volatile assets like cryptocurrencies.

Institutional Flows and ETF Hopes Offer Bullish Counterweight

Renewed speculation about an XRP-focused ETF and increased institutional inflows are providing a bullish counterweight to technical concerns. Legal clarity for Ripple Labs, combined with global regulatory improvements, has boosted investor confidence and fueled accumulation among large holders.

If these positive catalysts persist, analysts see the potential for XRP to break above $2.30 and target $2.70 or higher by mid-July. Some projections, under especially bullish scenarios, even point to $4.00 or $6.50 if major events materialize rapidly.

The bullish case hinges on XRP maintaining key support levels and overcoming resistance, with institutional demand acting as a crucial driver.

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Bearish Scenarios Remain if Key Supports Fail

Despite optimism, the risk of a significant correction cannot be dismissed. If XRP is rejected at major resistance or negative legal or macroeconomic news emerges, the price could retreat to $2.00-$2.25 or lower before any new rally attempt.

A breakdown from the current triangle pattern could accelerate losses, with some technical projections warning of a move toward $1.14 or even $0.60 in extreme cases.

The average 25% drop following overbought Stochastic RSI signals in 2025 remains a key risk factor for traders and investors to monitor.

Market Sentiment Divided as Bulls and Bears Face Off

The market remains sharply divided, with bullish analysts citing falling wedge patterns, whale accumulation, and ETF optimism, while bearish voices point to the historical reliability of the Stochastic RSI signal.

While short-term holders are increasing their positions, the growth of new wallets remains muted, suggesting that existing participants are still largely driving the rally.

External factors, including a weakening US dollar and potential Federal Reserve rate cuts, add further complexity to the outlook. As July progresses, all eyes are focused on whether XRP can defy its technical history or if another sharp correction is inevitable.