XRP is gaining strength again. The token is up about 6% in the past 24 hours, trading near $1.43, slightly outperforming the broader crypto market rally.
While the move may look modest on the surface, several factors say XRP could be setting up for a much larger breakout, potentially toward the $4 level and above.
Strong Link to Traditional Markets
One reason behind XRP’s recent strength is its high correlation with the stock market.
Data shows XRP has a 94% correlation with the S&P 500, meaning it is closely moving with traditional equities. As stock markets rally, crypto assets like XRP are benefiting from renewed risk appetite among investors.
In simple terms, when money flows into stocks, it is also flowing into crypto.
The Downside Liquidity Has Been Cleared
According to one market analyst, the recent pullback appears to have “swept the downside liquidity.” That means most of the selling pressure below current levels has already been absorbed.
Technically, XRP pulled back to the 50% Fibonacci retracement level near $1.31, which is considered a strong support zone. The correction looked controlled and orderly rather than a panic-driven selloff.
If support continues to hold, it increases the chances that the recent correction is complete.
Heavy Short Positions Above Current Price
Here is where things get interesting.
Above the current price, there is reportedly a large number of short positions. These are traders betting that XRP will fall.
If XRP starts moving higher and breaks resistance levels, those short sellers may be forced to close their positions. When shorts close, they must buy back the asset — and that buying pushes the price even higher.
This is known as a short squeeze. In a strong squeeze, price can move very quickly because:
- Shorts are forced to buy
- Momentum traders jump in
- Breakout traders add fuel
- Fear of missing out kicks in
If that happens, analysts say XRP could quickly spike toward $4.20 or higher.
Important Levels to Watch
For a stronger bullish confirmation, analysts are watching several levels:
- First resistance near $1.46
- Next level around $1.51
- Holding support above $1.35 is important
A clear break above these resistance levels could signal that a new upward wave has started.
While the recent bounce does not yet fully confirm a long-term reversal, the price structure remains constructive. The correction unfolded in a controlled, three-wave pattern, which often keeps the door open for another upward move.
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