XRP Shows "Coiled Spring" Setup as Network Liquidity Hits Record Levels

Price Momentum Breaks Into Fresh Territory

XRP has successfully reclaimed critical support at $2.20 and has advanced towards $2.41, marking one of its strongest rallies in recent months. This surge occurs alongside a rejuvenating trend in the broader cryptocurrency sector, with Bitcoin pushing towards $93,000, setting the stage for a risk-on trading environment across major digital assets.

According to a report from CryptoQuant, XRP's decisive break above the $2.30 resistance level was significantly influenced by forced short covering, which is often indicative of capitulation among bearish traders and can spur further upward movement. However, the resilience of this rally appears to be supported by more fundamental factors, including genuine network activity and increasing institutional positioning.

Record Liquidity Signals Serious Capital Inflows

The most compelling metric substantiating XRP's bullish trajectory is the dramatic surge in liquidity on the XRP Ledger decentralized exchange (DEX). On-chain data reveals that XRPL DEX liquidity has soared to around $173 billion—a remarkable achievement that indicates substantial institutional participation rather than mere retail speculation.

Significantly, the nature of these liquidity spikes has transformed since mid-December, with liquidity injections becoming more regular and larger in scale. This trend suggests an influx of sophisticated market makers and professional trading desks, typically foreshadowing sustained price increases, as it facilitates substantial capital flows without incurring extreme slippage.

Simultaneously, transaction activity on the XRPL DEX has surged, with market dynamics reflecting a clear bias towards buyers. The combination of rising volumes, increased on-chain activity, and burgeoning liquidity paints an optimistic picture of an ecosystem poised for major shifts.

The "Coiled Spring" Narrative

Traders often refer to "coiled spring" setups to describe assets that have consolidated after forming strong support—precisely what XRP appears to be achieving. The record liquidity, the dominance of buyers, and heightened network engagement signal that conditions are ripe for an extended upswing, provided that momentum remains robust.

Why It Matters

For Traders: The shift toward buyer dominance and frequent liquidity spikes creates favorable conditions for trending strategies, making it essential to consider risk management while potentially targeting price levels above $2.50 if $2.30 remains a solid support level.

For Investors: The historic DEX liquidity and real XRPL network growth suggest that XRP's value proposition is undergoing active validation, indicating that this price movement is not merely speculative but reflects substantial infrastructure development and use case adoption.

For Builders: The uptick in transaction activity on the XRPL DEX confirms the ecosystem's capability to accommodate enterprise-grade liquidity and payment infrastructures, potentially driving accelerated developer and institutional adoption in the upcoming months.

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Entities: XRP, Bitcoin, CryptoQuant, XRPL, XRPL DEX
Categories: Markets, Altcoins