XRP is leading a broader pullback in the crypto market on August 26, sliding roughly 6.6% over 24 hours to trade near $1.37, the worst performance among the top 10 cryptocurrencies.

The decline follows one of the token’s strongest weekly rallies in recent memory, and traders are now watching whether the pain has only just begun.

What Triggered the Sudden Reversal

XRP rocketed from a cycle low of $0.9877 on August 17 to a three-month high of $1.69 by August 22, a nearly 70% gain that outpaced Bitcoin’s 23.6% and Ethereum’s 28.1% over the same stretch.

That speed left momentum indicators deeply overbought, with the daily RSI reaching 88, a level last seen during July 2025’s all-time high near $3.65.

Crypto analyst ChartNerdTA described the surge as a genuine breakout rather than noise, driven by a liquidity trap for short sellers and positive funding rates. The subsequent unwind has since produced an 18% decline from the $1.70 peak, pulling the price into the $1.40-$1.38 range.

Broader market conditions compounded the move. Bitcoin cleared $80,000 for the first time in months on Tuesday before cooling back toward $78,000 on Wednesday, dragging altcoins lower as traders braced for tonight’s core PCE inflation data and NVIDIA’s earnings report ahead of Jackson Hole.

Why the $1.40 Level Matters So Much Right Now

ChartNerdTA characterizes the pullback as a healthy correction, resetting overbought conditions rather than a trend reversal. The critical battleground sits at $1.40.

A daily close below that level would expose structural supports between $1.30 and $1.20, with a deeper breakdown risking a return toward $1.00.

Reclaiming the weekly 50 EMA near $1.54 would restore short-term bullish control and open a path back toward $1.70, with longer-term targets extending toward $1.80-$2.00 if momentum returns.

Analyst EGRAG CRYPTO offered a more cautious counterpoint, referencing a fractal pattern first shared in March. While acknowledging the risk of confirmation bias in relying on fractals, the trader warned that failing to retest recent lows could leave momentum traders sidelined, chasing local tops only to panic-sell subsequent bottoms.

Not every signal point is bearish, however. XRP-linked ETFs have logged six consecutive days of net inflows, according to SoSoValue data, suggesting the current weakness reflects a leverage unwind rather than institutions exiting positions.

CryptoQuant analyst Pelinay separately flagged long liquidations reaching $4.66 million, up 31.82% in a single day, warning that selling pressure could persist before any stabilization.

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Whether this marks a constructive reset or the start of a deeper corrective phase will likely hinge on the bulls’ ability to defend $1.40 in the coming sessions.

Source: BeInCrypto