XRP Could be Facing a 18% Breakdown, Hidden Bear Flag Pattern Shows

XRP price bounced roughly 3% from its March 27 low of $1.31, reclaiming the $1.35 area. However, the move may be building a bear flag rather than the start of a sustained recovery, and the broader market conditions are not helping.

Since peaking at $1.60 on March 17, XRP has already corrected 18%. The intraday bounce looks constructive on the surface, but the chart, derivatives, and on-chain data all point in the same direction.

Bear Flag Forms as Hidden Bearish Divergence Builds

The 12-hour chart shows XRP trading inside a bear flag pattern. The pole formed during the 18% decline from $1.60 to $1.31 between March 17 and March 27. The current 3% bounce is shaping the flag portion, a rising channel that typically resolves with another leg down matching the pole’s size.

If the lower trendline of the flag breaks, a similar 18% measured move could be triggered from the breakdown point. That would take the XRP price toward the $1.08 zone (highlighted later in the price section).

The Relative Strength Index (RSI), a momentum oscillator, adds another layer of concern. Between February 6 and March 28, on the 12-hour chart, the price is forming a lower high while the RSI is forming a higher high.

That is a hidden bearish divergence, which typically points to a continuation of the existing downtrend rather than a reversal.

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The divergence has not yet been confirmed. Confirmation requires the next 12-hour candle to close below $1.35. If instead the price clears $1.35 and sustains above it, the structure delays.

Full invalidation sits above $1.60, the pole’s peak. If the broader market continues to weaken, this setup could confirm quickly.

However, even without the RSI, the derivatives and spot data suggest the bounce is standing on thin ground.

Open Interest Rises, but Hodlers Are Reducing Positions

Since the bounce began, XRP open interest has risen from $737.72 million to $759.21 million, a 2.9% increase. At the same time, the funding rate has become less negative, moving from -0.011% to -0.003%. That combination means more long positions are being opened into the bounce.

Rising open interest during a bounce inside a bear flag is typically a warning rather than a bullish confirmation. It means some leveraged traders are betting on bounce continuation, but if the pattern breaks down, those new longs become liquidation fuel.

The spot market offers no counterbalance. The Hodler net position change, a Glassnode metric tracking accumulation by longer-term wallets (155 days or more), held steady between March 19 and March 25 at approximately 238 million XRP.

Since March 25, that balance has dropped to 229.78 million XRP, a reduction of roughly 8.25 million tokens or 3.47%.

Conviction holders are quietly reducing exposure right before the XRP price bounces. When derivatives lean long, and spot holders lean out, the setup favors the bears.

If the RSI-led hidden bearish divergence confirms and the price corrects, the spot support needed to absorb the selling simply is not there. It remains to be seen whether spot buyers also come in, as the recent longs did. If that happens, some spot support can help stem the possible drop.

XRP Price Forecast and the $1.35 Test

The XRP price needs a clean 12-hour close above $1.35 to delay the bearish setup. Above that, $1.37 and $1.40 become the next resistance levels. However, based on the bear flag structure and the divergence forming, any move under $1.35 that holds would begin the confirmation process.

If the flag breaks and the $1.31-$1.32 neckline zone gives way, the measured move of roughly 18% activates from the breakdown point. That targets the $1.08 zone, which would then represent the lowest level for XRP since early February 2026.

On the upside, only a move above $1.60 would fully invalidate the bearish structure and end the lower-high sequence that has defined XRP’s 2026 trading playbook.

For now, the $1.35 reclaim separates a delayed bearish setup from an 18% breakdown toward $1.08.