XRP Shows “Coiled Spring” Setup As Network Liquidity Hits Record Levels

Overview

XRP has recently regained momentum, successfully reclaiming the $2.20 level and moving towards $2.41, marking one of its strongest advances in recent months. This recovery follows a prolonged period of selling pressure and uncertainty, reigniting bullish expectations among some investors who believe XRP may challenge its all-time high later this year.

Recent Developments

The recent price movements of XRP come in the context of a broader recovery across the crypto sector. A report from CryptoQuant indicated that early January saw an improvement in market conditions, with Bitcoin also showing strength alongside XRP. The price action suggests that XRP has broken out of its prior consolidation range, indicating a potential shift in market sentiment.

Significantly, the surge in XRP’s price is not solely attributed to speculative trading. On-chain data reveals a deeper structural change within the XRP ecosystem, particularly in network activity and liquidity. The XRP Ledger (XRPL) has experienced a notable increase in network growth, reaching levels not observed during previous consolidation phases. This uptick in activity suggests that the rising prices are supported by genuine usage and participation rather than mere speculation.

XRPL Liquidity Surge Signals Structural Shift Behind Breakout

The CryptoQuant report highlights a decisive change in XRP’s market structure, driven by both price appreciation and significant shifts in liquidity and market participation. One of the most remarkable developments is the substantial increase in liquidity on the XRPL decentralized exchange, which has reportedly climbed to around $173 billion. This expansion in liquidity indicates that large market participants are actively positioning themselves rather than exiting during periods of weakness.

The timing of this liquidity expansion is noteworthy. Since mid-December, there have been more frequent and larger liquidity spikes, which align with the entry of more sophisticated market makers. This change has transformed the trading environment, enabling larger players to engage without causing disruptive price fluctuations. Additionally, transaction activity on the XRPL DEX has surged, further indicating that the deeper order books are supporting real usage rather than passive holding.

Market behavior has also shifted towards buyer dominance, with aggressive buying taking control as bearish pressure has diminished. This shift allowed XRP to break through previous resistance levels, including key resistance near $2.30, further supported by forced short covering.

XRP Faces Heavy Overhead Resistance

XRP’s daily chart indicates a significant shift in short-term momentum, recovering sharply from the December lows near the $1.85–$1.90 zone. Currently trading around $2.35, this rebound has caught sellers off guard. Following months of lower highs and lower lows, analysts are viewing this recovery as an early attempt for trend reversal rather than a confirmed bullish continuation.

The breakout above the short-term moving average is a constructive development, as this level had previously acted as resistance throughout November and December. However, XRP is approaching a dense resistance cluster between $2.45 and $2.65, where both the 100-day and 200-day moving averages converge. This zone has historically attracted strong selling pressure.

While recent rallies show increased participation compared to late December, they remain below levels seen during prior impulsive advances. This indicates that while buyers are regaining control, their conviction is still developing. A period of consolidation above $2.20 could solidify this move; however, failure to maintain above the $2.30–$2.35 area may result in a pullback, leaving XRP vulnerable to renewed selling pressure.

From author

The current market dynamics surrounding XRP present a unique scenario. The combination of increased liquidity, heightened transaction activity, and shifting market sentiment suggests a potential turning point. However, the presence of significant resistance levels indicates that caution may still be warranted as the market navigates these changes.

Impact on the crypto market

• XRP’s recent price movements may signal a broader recovery trend in the cryptocurrency market.
• An increase in liquidity on the XRPL could attract more institutional and retail investors, enhancing market stability.
• The shift towards buyer dominance may influence other cryptocurrencies to follow suit, potentially leading to a more bullish market sentiment.
• The presence of strong resistance levels could result in increased volatility as traders react to price movements.
• Continued growth in transaction activity on the XRPL may reinforce the utility of XRP as a digital asset, impacting its long-term value proposition.