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

XRP has regained momentum after reclaiming the $2.20 level and extending its move toward the $2.41 mark, marking one of its strongest advances in recent months. The recovery comes after a prolonged period of selling pressure and uncertainty, and it has reignited bullish expectations among a segment of investors who now believe XRP could challenge or even surpass its all-time high later this year. While skepticism remains across the broader market, price action suggests that XRP is no longer purely defensive.

According to a recent CryptoQuant report, early January brought visible improvement across the crypto sector, with Bitcoin pushing toward $93,000 and XRP moving decisively above $2.30. That synchronized strength helped shift sentiment, as XRP broke out of its prior consolidation range and began showing signs of renewed trend formation. Significantly, the move has not been driven by price alone.

On-chain data points to a deeper structural change within the XRP ecosystem. Activity on the XRP Ledger has accelerated sharply, with network growth reaching levels not seen during the previous consolidation phase. This expansion suggests that rising prices are being supported by genuine usage and participation rather than short-term speculation.

The CryptoQuant report indicates a decisive change in XRP’s market structure, driven not only by price appreciation but also by deep shifts in liquidity and participation. One of the most striking developments is the explosion in liquidity on the XRPL decentralized exchange, which has climbed to roughly $173 billion.

Rather than thinning out during periods of weakness, liquidity has expanded sharply, suggesting that large players are actively positioning rather than exiting. This behavior is typically associated with preparation for heightened volatility or a more durable trend change.

The timing of this expansion is also important. Since mid-December, liquidity spikes have become both more frequent and larger in size, a pattern that aligns with the entry of more sophisticated market makers. This effectively transforms the trading environment, making it easier for whales and institutional participants to deploy size without causing disruptive price swings. In practical terms, XRP is becoming a more efficient market for large-scale capital.

Crucially, this liquidity is not idle. Transaction activity on the XRPL DEX has surged, indicating that deeper order books are supporting real usage rather than passive positioning. At the same time, market behavior has shifted toward buyer dominance. Aggressive buying has taken control, while bearish pressure has faded, allowing the price to break out of its prior compression.

Forced short covering further reinforced that move and helped propel XRP through key resistance near $2.30. Together, these dynamics suggest that structural improvements, not just speculative momentum, underpin XRP’s recent strength.

XRP’s daily chart shows a notable shift in short-term momentum after a prolonged period of downside pressure. Price has surged from the December lows near the $1.85–$1.90 zone and is now trading around $2.35, marking a sharp recovery that has caught sellers off guard.

Following months of lower highs and lower lows, analysts view this rebound as an early trend reversal attempt instead of a confirmed bullish continuation

The breakout above the short-term moving average (blue line) is a constructive development. This level had previously acted as dynamic resistance throughout November and December, consistently rejecting upside attempts. Reclaiming it signals improving momentum and a potential shift in market structure.

However, XRP is now approaching a dense resistance cluster between $2.45 and $2.65, where both the 100-day and 200-day moving averages converge. Historically, this zone has attracted strong selling pressure.

While the recent rally shows increased participation compared to late December, it remains well below the levels seen during prior impulsive advances. This suggests that although buyers are regaining control, conviction is still developing. A period of consolidation above $2.20 would help solidify this move.

If XRP can hold above the $2.30–$2.35 area, the probability of a broader recovery toward $2.70 increases. Failure to do so would likely result in a pullback, keeping XRP range-bound and vulnerable to renewed selling pressure.

Featured image from ChatGPT, chart from TradingView.com