🕒 Posted on: 12/1/2025 9:16:31 PM UTC

XRP's Path to $2.2 Hinges on Liquidity From High-Leverage Short Positions

A deep dive into the technical and on-chain factors shaping XRP's price action as it contends with a market-wide downturn and a critical resistance zone.

Introduction: A Market Under Pressure

The cryptocurrency market experienced a significant contraction in early December 2025, with the total market capitalization falling by $141 billion within a two-day period. This sell-off pushed the market-wide Fear and Greed Index to a reading of 20, teetering on the threshold of extreme fear. Within this turbulent environment, XRP, the digital asset associated with Ripple, has faced its own set of challenges. After a brief push above $2.2, the asset slumped back toward the $2 level, unable to sustain momentum above the $2.28 resistance. Concurrently, on-chain data has pointed to a continued decline in XRP exchange reserves, a signal often interpreted as accumulation by long-term holders. However, despite this potential accumulation, the short-term technical landscape paints a bearish picture, with XRP's immediate path to reclaiming higher ground seemingly dependent on triggering liquidity from a dense cluster of high-leverage short positions.

Analyzing the Bearish Bias and Price Rejection

The Strength of Sellers Revealed The recent price action for XRP has underscored the prevailing strength of sellers in the market. Last week, when XRP's price pushed past $2.2, analysis suggested a potential bounce toward $2.58 before a bearish reversal. However, the bulls' inability to sustain prices beyond $2.2 revealed significant selling pressure. This downturn occurred amidst a broader market wipeout, reinforcing the signal of seller dominance. On longer timeframes, XRP has continued its multi-month downtrend, making a new lower low on the daily chart and threatening to fall below the psychologically important $2 support level once again. To the south, critical long-term support levels are identified at $1.9 and $1.61, which could serve as major floors if the downward pressure persists.

The Overhead Supply Zone: A Formidable Hurdle

A Closer Look at the $2.09 to $2.18 Resistance A detailed examination of the 1-hour chart reveals a substantial imbalance overhead, specifically in the price range between $2.09 and $2.18. While not strictly defined as a traditional fair value gap, this zone represents a sizeable area of supply where selling interest is concentrated. Technical analysis suggests that any price bounce toward this zone is likely to face strong rejection, offering what some traders view as an opportunity to initiate short positions. For the short-term bias to flip from bearish to bullish, XRP would need to achieve a decisive move beyond $2.21. Achieving this requires not only technical breakout but also a stabilization in overall market sentiment and a demonstrable increase in demand for XRP specifically.

Liquidation Maps and High-Leverage Shorts: The Catalyst for Movement

Why $2.06-$2.15 is a Critical Liquidity Target Beyond standard chart patterns, liquidation heatmaps provide crucial insight into potential price movements. These maps visualize concentrations of leveraged positions that are at risk of being automatically closed, or "liquidated," by exchanges if the price moves against them. The current data highlights a significant cluster of high-leverage short positions—bets that XRP's price will fall—situated between $2.06 and $2.15. This cluster acts as a prime liquidity target for the market. In prevailing market conditions, it is common for prices to experience short-lived rallies to "sweep" these dense pockets of liquidity before resuming the primary trend. Therefore, analysis indicates that XRP is likely to bounce higher in the short term precisely to trigger these short-position liquidations, which would provide fuel (liquidity) for a move toward the $2.2 region before potentially continuing its broader downtrend.

Indicator-Based Review: Confirming Bearish Momentum

Moving Averages and Selling Pressure The bearish narrative is reinforced by key technical indicators across both daily and 1-hour timeframes. These indicators show strong selling pressure and sustained bearish momentum. Specifically, the 20-period and 50-period moving averages have consistently acted as dynamic resistance levels, rejecting XRP's price attempts to move higher. This alignment of indicators suggests that any short-term bounce toward the mid-point of the resistance zone, around $2.15, is likely to encounter another wave of selling pressure. This could result in a subsequent slump back toward and potentially below the $2 support level, keeping sellers in control of the immediate narrative.

Strategic Price Hotspots for Traders to Monitor

Key Levels Defining XRP's Next Move For traders navigating this volatile landscape, several price levels are paramount:

Resistance Zone ($2.09-$2.18): This is the immediate supply zone overhead. A bounce into this range is viewed as a probable selling or shorting opportunity unless a clear breakout above $2.21 occurs with strong volume.
Immediate Support ($1.9): This level represents key support from long-term XRP price action. A breach below $2 would bring this level into focus as the next major defense for bulls.
Major Long-Term Support ($1.61): A deeper support zone that has historical significance and would be critical in a more extended bearish scenario.

For lower timeframe traders, vigilance for a minor price bounce toward $2.2 is advised, as such a move would align with the liquidity sweep thesis and could present a defined risk scenario.

Conclusion: Navigating Uncertainty with Defined Levels

The path forward for XRP is currently dictated by a clash between underlying accumulation signals and overpowering short-term technical headwinds within a fearful broader market. The asset's immediate journey toward $2.2 appears intricately linked to the need to trigger liquidity from the dense cluster of high-leverage short positions between $2.06 and $2.15. While this could facilitate a brief rally, the overarching structure—defined by moving average resistance, a clear supply zone, and a pattern of lower lows—remains bearish.

Investors and traders should watch for two key developments: first, whether a short-term bounce materializes to test the identified liquidity zone and how it reacts at that resistance; and second, whether the longer-term support levels at $1.9 and $1.61 hold in the event of further market weakness. Ultimately, while on-chain accumulation may hint at long-term confidence, navigating the current market requires respect for the clear technical boundaries and liquidity dynamics that are shaping XRP's price action in real-time.

Disclaimer: The information presented does not constitute financial, investment, trading, or other types of advice and is solely the writer’s opinion.

Article based on analysis by Akashnath S., Senior Journalist and Technical Analysis expert at AMBCrypto.