XRP Retail Traders Show "Extreme Fear" — Could This Be a Rally Catalyst?

Source: CryptoNewsNet Original Title: XRP Retail Traders Show “Extreme Fear,” Data Shows This Could Be a Rally Catalyst Original Link: XRP has again slipped into the “extreme fear” territory amid the persistent downtrend, but data indicates this may be good for the market.

The crypto market has not been favorable to XRP, as well as Bitcoin (BTC) and other top altcoins. As the total crypto market cap loses $200 billion following the Jan. 6 peak of $3.21 trillion, XRP has contributed $28.21 billion to this loss, with its price down by 19.5% since Jan. 6.

XRP and the broader crypto market engineered a recovery on Jan. 13, but geopolitical tensions and market uncertainty immediately capped this upside. Amid the ongoing downtrend, retail sentiments around XRP have turned sour, with social data confirming a slip into “Extreme Fear.” However, such positions typically lead to rebounds.

Key Points

• XRP has struggled since reaching the Jan. 6 peak of $2.41, down 19.5% from this high, as it loses the $2 psychological price level.
• These struggles have been triggered by a broader market downturn, with the total crypto market losing $200 billion since Jan. 6, and XRP contributing $28 billion to this loss.
• Amid the ongoing downtrend, social data confirms XRP retail sentiments have dipped, slipping into the “Extreme Fear” territory.
• Historical data confirms that a drop in retail sentiment to “Extreme Fear” often precedes price rebounds.

XRP Retail Sentiment Turns Sour

This is according to a recent market commentary from crypto intelligence platform Santiment, which recently assessed the impact of the ongoing market turbulence on retail sentiment. According to Santiment, social data confirms that XRP has collapsed into extreme fear for the third time this year.

Specifically, on Jan. 20, XRP’s ratio of positive sentiments against negative sentiments broke below the 1.873 level, slipping into Extreme Fear. The ratio has continued to dip since then, currently pushing toward the 1.794 mark, as retail investors show increased panic amid XRP’s position below the pivotal $2 psychological level.

Historical Context Around XRP Retail Sentiment

However, Santiment suggested that this sour sentiment may be a “buy signal,” citing historical data. Specifically, data indicates that each time retail sentiment slips below 1.873 and enters the “Extreme Fear” region, the XRP price often recovers from its lows. However, the extent of each rebound has varied.

The first time sentiment entered the Extreme Fear area this year was on Jan. 2, as XRP sought to recover the 30% loss from Q4 2025. Interestingly, after retail turned fearful, XRP built on an existing upward push, rallying from $1.87 to this year’s peak of $2.41. This marked a 28.8% increase.

This trend played out again on Jan. 18, as investor sentiment turned sour following the retracement below the $2.41 peak. Notably, sentiments entered Extreme Fear again on Jan. 18, and XRP eventually recovered above $2 but immediately lost momentum, eventually closing that day bearish.

Further data also confirms that each time a rebound occurs and sentiment turns overly positive, XRP often faces a roadblock at the next resistance and suffers a pullback. This trend played out on Jan. 7, 11, and 13.

Important Caveat

Interestingly, amid the latest dip in sentiment, XRP has staged a recovery, up over 3% since Jan. 21, as it now trades for $1.95. However, while retail sentiment remains fearful, it is important to note that this does not represent a certain signal that prices will continue to recover from here. In addition, the extent of recoveries during sentiment dips has always varied.