Extreme Fear Grips Market As Descending Wedge Takes Shape

• XRP drops 0.63% to $1.9097, extending the 19% decline from January highs as Santiment data shows sentiment reaching extreme fear levels.
• Spot exchange inflows of $5.38 million suggest accumulation continues despite bearish sentiment and price weakness.
• A descending wedge pattern forms on the daily chart, a structure that typically resolves with upside breakouts when selling exhausts.

XRP price today trades near $1.9097 as sentiment plunges into extreme fear territory following a 19% decline from the January 5 high. The selloff has pushed smaller traders to the sidelines, but a descending wedge pattern and continued spot accumulation suggest the setup may be shifting beneath the surface.

Extreme Fear Dominates Sentiment

Santiment data shows XRP sentiment has reached extreme fear levels as online chatter turns sharply negative. The indicator tracks social discussion across major platforms, measuring whether commentary skews bullish or bearish.

When negativity dominates, smaller traders typically stop buying dips and step aside. This positioning creates crowded conditions that can reverse sharply once selling pressure exhausts. Even modest buying can trigger outsized moves as shorts cover and sidelined traders cautiously return.

Fear readings are not timing tools. Negative sentiment can persist if the broader market stays unstable or no catalyst emerges to change the narrative. But extreme readings often appear late in corrections rather than at the start, suggesting the worst of the selling may be nearing completion.

Spot Inflows Continue Despite Bearish Mood

Exchange flow data shows accumulation despite the gloomy sentiment. Coinglass recorded $5.38 million in net inflows on January 23, meaning coins are moving off exchanges into private wallets.

The pattern contradicts the extreme fear reading. When flows suggest accumulation during peak negativity, it often signals that longer-term holders view current prices as attractive. These buyers are willing to act while retail traders remain paralyzed by fear.

The divergence between sentiment and flows creates a potential setup for reversal. Accumulated supply that leaves exchanges reduces overhead resistance when buying eventually resumes.

Derivatives Activity Contracts As Traders Wait

Futures markets show declining participation. Open interest fell 2.73% to $3.31 billion while trading volume dropped 40.31% to $3.90 billion. When both metrics decline together, it signals that traders are reducing exposure rather than actively betting on direction.

Options activity tells a different story. Volume surged 134.60% to $9.86 million while open interest climbed 10.72% to $74.31 million. The spike indicates that some traders are positioning for volatility through options rather than directional futures bets.

The long/short ratio sits at 0.94, showing slight short bias among retail traders. Top traders on Binance maintain 3.04 long/short ratio, suggesting larger accounts remain net long despite the correction.

Liquidations stayed minimal at $2.86 million over 24 hours. The lack of forced closures indicates leverage has been flushed, leaving cleaner positioning for the next directional move.

Descending Wedge Pattern Emerges

On the daily chart, XRP has formed a descending wedge since the January 5 high near $2.35. The pattern shows converging trendlines with lower highs and lower lows compressing into a narrowing range.

Descending wedges are typically bullish reversal patterns. Selling exhausts as price compresses toward the apex, and breakouts usually occur to the upside. The pattern projects a measured move back toward the $2.20 to $2.30 zone if the upper trendline breaks.

Key levels now:

• Immediate resistance: $2.00 (psychological and 20 EMA zone)
• Secondary resistance: $2.04 (50 EMA)
• Wedge upper boundary: $2.10
• Supertrend resistance: $2.18
• Current support: $1.80 demand zone
• Breakdown target: $1.60

Price remains below all four EMAs, confirming the short-term bearish structure. The gap between current price and the 20 EMA at $2.00 represents the first hurdle bulls must clear to confirm a reversal.

Outlook: Will Fear Mark The Bottom?

Extreme fear often marks turning points, but confirmation requires price action. The descending wedge structure, spot accumulation, and exhausted sentiment create conditions for reversal. Bulls need a close above $2.00 to confirm the pattern is breaking higher.

Bullish case: Price breaks the wedge upper boundary and reclaims $2.00. A close above $2.04 targets the Supertrend at $2.18 and measured move toward $2.30.

Bearish case: The wedge breaks down through $1.80 support. A daily close below $1.80 confirms capitulation and targets $1.60 with potential extension toward $1.40.

XRP sits at peak pessimism with a bullish pattern forming. The next sessions will determine whether extreme fear marks a bottom or precedes further decline.