XRP has given back all of its early‑year gains, sliding toward the $1.90. Despite the pullback, several on‑chain and market indicators are pointing to a possible breakout from current levels, driven largely by a sharp decline in XRP held on exchanges. 

XRP Exchange Balances Slide To 1.5B

Market analyst Sam Daodu notes that over the past months, a substantial portion of XRP has steadily moved off centralized trading platforms and into long‑term storage and institutional custody. 

On‑chain figures indicate that XRP exchange balances dropped from roughly 4 billion tokens in early 2025 to about 1.5 billion by late December. This 57% decline represents the steepest annual reduction in XRP exchange supply on record.

Data from CryptoQuant reinforces this trend, showing shrinking XRP reserves on major trading platforms such as Binance, where balances continued to fall into early 2026. At the same time, wallet accumulation has increased, particularly among institutional custody accounts. 

Daodu argues that with fewer tokens available on exchanges, buying pressure that previously moved XRP only marginally can now drive gains of 10% to 15% within days. 

When combined with approximately $1.37 billion in XRP exchange-traded fund (ETF) inflows recorded since November 2025, Daodu believes the conditions favor a potential breakout toward the $4 to $5 range, rather than another rally that stalls below $3.

Bullish, Base, And Bearish Scenarios

Looking ahead, Daodu outlines three broad price paths for XRP, each tied to how exchange balances and ETF inflows evolve. In a bullish scenario, the altcoin could move into the $4 to $5 range if monthly ETF inflows average $300-$500 million and exchange balances fall below 1.5 billion tokens. 

A more neutral outcome would see XRP trading between $2.50 and $3.50. This scenario assumes ETF inflows slow to roughly $50 million to $70 million per week and exchange balances continue to decline at a steadier pace. 

The bearish case hinges on the possibility that the supply contraction thesis proves overstated. If rapid transfers refill exchange order books, escrow releases increase selling pressure, or ETF demand slows due to tighter macroeconomic conditions, XRP could lose support. 

In that scenario, prices may fall below $2.00 and revisit the $1.60 level during periods of risk aversion. Prolonged uncertainty could see XRP trading between $1.50 and $2.00 for much of 2026, according to the analyst. 

At the time of writing, the altcoin was trading at $1.94. This represented losses of 4% and 8% over seven and fourteen-day periods, respectively. This positions the fifth-largest cryptocurrency in terms of market cap 46% below the current all-time high of $3.64 reached back in July of last year.

Featured image from DALL-E, chart from TradingView.com 

A significant short squeeze may be on the horizon for XRP investors, potentially serving as the main catalyst for a rally that could push prices beyond the all-time high of $3.90. 

Market analyst Bird made these predictions in a recent post on social media platform X (formerly Twitter), highlighting key observations from his analysis.

Key Liquidity Zones For XRP

Bird shared a chart that illustrates where leveraged positions—both long and short—are concentrated in the market. He explained that the colored bands on the chart indicate levels of liquidity, where the potential for forced buying or selling could occur due to stop-loss orders and liquidations. 

The analysis of the altcoin’s daily chart heatmap categorizes liquidity into two distinct zones: red, signifying deep liquidity, and lighter colors indicating less liquidity.

From his observations, Bird noted that price movements away from low liquidity areas tend to occur rapidly. He explained this process: when prices approach zones with significant stop-loss clusters, they often trigger large sell-offs, wiping out long positions. 

Price Targets $4.20

Following these movements, the price typically rotates back toward shorts, leading to additional liquidation events. Bird pointed out that on Sunday, a number of long XRP positions were liquidated. 

Now, he sees a dense liquidity pocket forming around the $4.20 mark, primarily from short XRP positions. This situation incentivizes market makers to drive prices toward this liquidity to close out those trades, rather than moving away from it. 

As a result, Bird expressed confidence that the current XRP price rally is far from over. He believes that a new all-time high is imminent, as the potential for a substantial short squeeze looms. 

At the time of writing, the fifth-largest cryptocurrency on the market was trading at $2, having briefly dropped to $1.84 earlier on Monday. 

Featured image from DALL-E, chart from TradingView.com 

Market expert Bird has recently issued a bold forecast for XRP, the fifth-largest cryptocurrency, suggesting that it could experience a major upside of 800% within this year. If this prediction holds true, XRP could reach a new all-time high of $18.40 per coin.

Forecast Indicates XRP Might Rival Ethereum

Bird’s forecast hinges on the XRP/BTC ratio, which he predicts will reach 1:5,000 by the end of 2026. This means that 5,000 XRP would be equivalent to 1 Bitcoin (BTC). Currently, the XRP/BTC ratio trades at approximately 0.00002235. 

For Bird’s envisioned target to materialize, the ratio must increase to 0.0002 BTC per token, representing a substantial gain of around 794% from current levels.

With a total supply of 100 billion coins, this price projection implies an overall valuation of approximately $1.84 trillion for XRP. Such a figure would place the cryptocurrency in close competition with Ethereum—and striking distance of Bitcoin’s market cap.

Additional Price Scenarios For The Altcoin

Market expert Sam Daodu also outlined alternative scenarios for XRP’s future performance. In a base case, where the altcoin garners continued institutional support but doesn’t close the gap with Bitcoin’s market capitalization, the price could range between $3 and $4. 

This outcome would depend on exchange traded funds (ETFs) attracting a “few billion in assets” while Bitcoin’s dominance falls to the 40–50% range during a broader altcoin rotation.

Conversely, there exists a bear case where macroeconomic challenges or obstacles within the crypto ecosystem could hinder XRP’s price growth. Factors such as geopolitical instability could redirect capital back to Bitcoin and gold, while banks might opt for private ledgers and established stablecoins instead of adopting XRP. 

Monthly escrow releases from Ripple of 1 billion coins, accompanied by a potential diminishing exchange-traded fund demand, might cap any potential upside action for the cryptocurrency, leaving it to trade around its current trading prices of $2.

Featured image from DALL-E, chart from TradingView.com 

As the cryptocurrency market enters the new year, optimism around XRP is growing, particularly following Standard Chartered’s positive outlook for the altcoin. As NewsBTC reported two weeks ago, the bank projects a significant surge for the token, forecasting a potential new all-time high of $8.

Recently, market analyst Sam Daodu has identified four key catalysts that could drive XRP toward this major milestone, potentially in the first quarter of the year.

What Could Drive Prices Higher?

The first catalyst stems from the imminent passage of the CLARITY Act, the crypto market structure bill expected to be marked up on January 15. Daodu asserted that the clarity provided by this new bill could significantly enhance institutional participation in the XRP market. 

In addition, Ripple, the firm behind the altcoin, recently received conditional approval from the Office of the Comptroller of the Currency (OCC) to launch Ripple National Trust Bank, which will be a federally supervised trust institution. 

Moreover, seven spot XRP exchange-traded funds (ETFs) are now trading in the US, boasting a combined assets under management (AUM) exceeding $2 billion and locking up 777 million XRP tokens. 

Another significant factor in XRP’s potential rise is the growth of the RLUSD stablecoin, which has achieved a market capitalization of $1.33 billion and ranks third among US-regulated stablecoins poised for compliance under the GENIUS Act. 

As banks begin deploying RLUSD across various payment corridors, activity on the XRP Ledger is expected to surge. Network fees paid in XRP create a direct link between the growth of stablecoins and a gradual reduction in XRP supply, turning utility into ongoing demand.

Finally, the GENIUS Act, signed into law by President Trump in July 2025, established clear regulations for US stablecoins. This clarity extends to Europe, Asia, and emerging markets, allowing for smoother cross-border expansion. 

Bullish XRP Scenario

Analyzing these factors, Daodu suggests a “bull case” scenario in which XRP could reach between $8 and $10. This depends heavily on sustained institutional demand and consistent inflows into exchange-traded funds. 

He noted in the report that if ETF inflows maintain the $300 to $500 million monthly rate observed in late 2025, it could lead to an additional 750 million to 1.25 billion XRP being locked by mid-year. 

Under these conditions, Daodu concluded that XRP has the potential to not only surpass the $8 threshold but to extend its gains into the $10 range as supply constraints exert greater influence on pricing.

At the time of writing, the fifth-largest cryptocurrency on the market was trading at $2.13, marking a 3.7% increase on Tuesday. 

Featured image from DALL-E, chart from TradingView.com