XRP Liquidity Sparks Rally Hopes Amid 41% Drawdown

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AMBCrypto, that venerable oracle of coin-caper, reports that the institutional interest in Ripple–XRP, if you please-remains as bristly as a brand-new quill. It sits, so the ledger would have us believe, as the second-most inquired asset among advisory assets, according to Grayscale’s Head of Product and Research, a certain Rayhaneh Sharif-Askary who could sell ice to a North Pole penguin.

Meanwhile, the long-term selling pressure in the crypto ballroom conducts itself with the persistence of a stubborn bowler hat. Since its dash to $2.41 in the first week of January, XRP has shed 41.35% in a brisk forty-five days-enough to make a chap’s moustache droop with sympathy.

Over on Upbit, the exchange reserve was filling up like a goose in a pastry shop, and the sacred $0.80 price level loomed as a target later this year. Yet liquidity, being as shy as a debutante at a luncheon, was compressed, while taker buy volume rose like a balloon at a village fête, nudging a short-term bullish bias into view.

The XRP’s potential for a rally

In a missive on CryptoQuant Insights, the on-chain savant The Alchemist reminds us that liquidity conditions can lend a helpful light to the market’s frolics.

Liquidity, in the currency sense, measures how thick the pond is with capital supporting XRP markets. The November 2024 rally saw a riotous expansion of USD liquidity, letting the altcoin prance even higher on the carpet of charts.

One should note that liquidity in the AMM pool is not the root of the pageant, but a handy prop that helps keep the move afloat. It reflects market conviction. Conversely, the current weeks of lean liquidity have made the price swings more twitchy, as the analyst observes.

The analyst pointed to the reduced token-side availability during the late 2024 rally to illustrate a “reduced active supply.” Yet, it could be that the scarcity was caused by the AMM being dragged into selling XRP for stablecoins in the heat of the rally.

The squeeze in XRP liquidity can make it easier for large buy orders to nudge prices higher. This suggests the compression mirrors the effects of a gleeful rally and its AMM shenanigans, rather than a portent of another upbeat price ascent looming on the horizon.

The Open Interest continued its downward waltz. The lack of speculative interest suggested the bearish XRP mood hadn’t yet put on its top hat and started reversing. Swing traders and investors would do well to watch for a rise in Open Interest, a signal that bullish sentiment might be pinning on a boutonniere.

Interestingly, the 7-day moving average of the Taker Buy-Sell Ratio trotted up to 1.01 on the 17th of February. A 7SMA above 1 is a rare flourish for the token and last wore its cloak during the early January rally.

The H4 swing structure has strutted bullishly, and the $1.41 retracement level has been tested as support. There lies potential for a relief rally beyond $1.55. Traders should keep a merry eye on the upward momentum, but the longer-term trend remains a bearish fellow in need of a good talking-to.

Final Summary

  • The XRP AMM liquidity conditions during the late 2024 rally bore a passing resemblance to current conditions, but an upward price expansion is not a foregone conclusion.
  • The Open Interest trends displayed a rather unenthusiastic speculative crowd, while the price action underlined the possibility of a short-term rally.

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2026-02-20 16:47