XRP Price Prediction: Bull-Bear Struggle at the $2 Mark, ETF Hype Fades, Is a Spring Rally Still Possible?

As the year-end approaches, XRP continues to oscillate below the psychological level of 2 dollars, with significant profit-taking pressure. Despite signs of improvement in the fundamentals—such as the dovish rate hike by the Bank of Japan alleviating the risk of closing yen arbitrage trades, and the market warming up to expectations of a rate cut by the Fed in March next year—XRP spot ETF inflows have plummeted to 82.04 million dollars per week, marking a new low since its launch in November, which undoubtedly casts a shadow over short-term market sentiment. Technically, the bearish arrangement of the moving average system suppresses price rebounds, and breaking through 2 dollars will be key to reversing the short-term downturn and testing upward targets of 2.5 and even 3 dollars. The market is waiting for macro policies and regulatory legislation to provide new catalysts.

Market Stalemate: Why is XRP Stuck at 2 Dollars?

As the end of the year approaches, trading activity in the crypto market typically tends to be subdued, and XRP's performance is a reflection of this seasonal characteristic. On Sunday, December 21, XRP fell slightly by 0.58%, closing at $1.9224, failing to maintain the upward momentum from the previous trading day, and underperforming the overall crypto market which saw a minor increase of 0.29%. The price continues to hover below the key psychological level of $2, reflecting a stalemate between bulls and bears at this point. On one hand, investors tend to lock in profits before the year ends, cashing in on some of the gains made this year; on the other hand, the constantly improving macro backdrop and the unresolved regulatory process are at odds, causing directional choices to be postponed.

From a technical structure perspective, the current price is clearly below the 50-day (approximately $2.1343) and 200-day (approximately $2.4098) Exponential Moving Averages (EMA), which forms a typical short positions arrangement and puts pressure on any attempts at a rebound. However, market analysts are beginning to notice that positive changes in the fundamentals may be gradually offsetting the weakness in the technicals. This divergence between the “fundamentals” and “technicals” is often a precursor to a potential trend reversal, but it also means that the market needs a stronger catalyst to break the current balance.

XRP Key Levels and Moving Averages Overview

• Immediate Support Level: $1.75, followed by $1.50
• Key Psychological Resistance Level: 2 USD
• 50 Day EMA Resistance: 2.1343 USD
• 200 Day EMA Resistance: 2.4098 USD
• Medium-term target resistance levels: $2.5, $3.0

ETF inflow slows down: Institutional enthusiasm wanes or is it poised for a comeback?

The flow of institutional funds is undoubtedly the most direct micro factor affecting the price of XRP recently. Data shows that in the week ending December 19, the U.S. XRP Spot ETF market recorded a net inflow of only $82.04 million, marking the weakest single-week performance since the product was launched in November. Although it has maintained a net inflow of funds for 25 consecutive days since its launch, accumulating a total of $1.07 billion, it still pales in comparison to the massive $4.85 billion inflow seen in the early days of the Bitcoin Spot ETF market. This gap has sparked discussions in the market regarding the long-term institutional appeal of XRP.

The structural reasons for this relatively mild performance are worth exploring. First, there is a difference in product supply: currently, there are only 5 XRP Spot ETFs in the market, while there are 11 Bitcoin Spot ETFs. Secondly, and more critically, the list of issuers for XRP ETFs lacks asset management giants like BlackRock. Looking back at the Bitcoin ETF market, BlackRock's iShares Bitcoin Trust (IBIT) has contributed over $62.5 billion in net inflows, almost single-handedly offsetting the massive outflow of $25.1 billion from Grayscale's GBTC, thereby establishing the net inflow tone for the entire market. The lack of such a “stabilizing force” in the XRP ETF space puts the stability and upper limit of its capital inflows to the test.

If we change the comparison target to Solana, it may provide a more fair perspective. Currently, there are 6 SOL spot ETFs in the market, which are more comparable in scale to the XRP ETF market. Since its launch in October, the cumulative net inflow for SOL ETF has been $741 million, slightly lower than XRP. However, both XRP and SOL have seen price performances in the fourth quarter (down 33% and 40%, respectively) that are far worse than Bitcoin, which only dropped 22%. This suggests that, in the current macroeconomic and regulatory environment, even positive ETF capital inflows are unlikely to fully withstand broader market headwinds, and the influence of institutional demand is temporarily overshadowed by larger narratives.

Macroeconomic Tailwind: The Policy Game Between the Fed and the Bank of Japan

If the ETF capital flow is the “near fire” on a micro level, then the monetary policies of the world's major central banks are the key to determining the “far water” direction of the cryptocurrency market. Recently, two important macro forces are undergoing favorable changes for crypto assets. The first is the monetary policy path of the Fed. As U.S. inflation data continues to slow and signs of a cooling labor market emerge, market expectations for the Fed to start a rate-cutting cycle in March 2025 have surged sharply. According to data from the CME FedWatch tool, the market pricing shows that the probability of a rate cut in March has jumped significantly from 47% on November 21 to 56.3% on December 19. Rate cut expectations typically reduce the opportunity cost of holding non-interest-bearing assets (such as cryptocurrencies), thereby boosting market risk appetite.

Another force comes from the Bank of Japan across the Pacific. Last week, the Bank of Japan made a rate hike that was interpreted by the market as “dovish.” Although it announced a rate hike, its guidance on future policy path was relatively mild, which led to a decrease in demand for the yen and a significant rise in the USD/JPY exchange rate. One important significance of this move is that it alleviated market fears of a massive “yen arbitrage trading” close position. For a long time, investors have borrowed yen at low interest rates, converted it into dollars, and invested in high-yield risk assets, including cryptocurrencies. If aggressive rate hikes by the Bank of Japan lead to a significant appreciation of the yen, it could trigger forced closings of these trades, thus withdrawing liquidity from the global market. Currently, it seems that the risk of this worst-case scenario has diminished.

The combination of these two macro forces—the potential shift towards easing by the Fed and the concerns over liquidity tightening triggered by the Bank of Japan—has together created a more constructive macro backdrop for crypto assets, including XRP, in the medium to short term. This may explain why, under the dual pressure of technical weakness and slowing ETF inflows, the price of XRP has not experienced a crash-like decline, but instead has shown a certain level of resilience.

Short to Medium Term Outlook: Can Regulatory Legislation Become the Key to Breakthrough?

Looking ahead to the next 4 to 12 weeks, the price trajectory of XRP will largely depend on two core variables: the ongoing inflow of funds and the progress of cryptocurrency regulatory legislation in the U.S. In the short term (1-4 weeks), if XRP can successfully break through and stabilize above the $2 mark, it will likely first challenge the 50-day EMA resistance level, thereby initially confirming a reversal of the short-term trend, targeting $2. This breakthrough requires a warming of ETF fund inflow data to support it.

The narratives for the medium term (4-8 weeks) and long term (8-12 weeks) are closely tied to the fate of the “Market Structure Bill.” This bill, aimed at providing a clear regulatory framework for the U.S. digital asset market, was passed in the House on July 17 and submitted to the Senate, which at the time drove XRP to surge nearly 15% in a single day. Although the recent government shutdown has delayed the bill's review process, bipartisan lawmakers have expressed hope to reinvigorate the bill's markup process in early January. If the bill can pass the Senate and be signed into law within the first quarter, it will be seen as a significant regulatory certainty boost and is very likely to become a key catalyst for pushing XRP towards the $2.5 and even $3 targets.

Therefore, a gradually forming market consensus is: in the short term, focus on ETF capital flow and technical breakthroughs, while in the medium term, focus on regulatory legislative breakthroughs. If both can form a synergy, XRP is expected to initiate a significant upward trend in the spring of next year. It is not an unrealistic expectation to return to the historical high of 3.66 dollars and test 5 dollars within the next 6 to 12 months.

Technical Analysis: Signals and Breakthrough Paths of the Moving Average System

From a purely technical analysis perspective, XRP is currently at a critical decision point. On the daily chart, the price is suppressed beneath a bearish arrangement of moving averages, which is a typical technical characteristic of bearish dominance. However, chart analysis is not just about looking at the current static position; it is more important to observe the changes in momentum and structure. The rebound in price from a low point last week initially suggests that a bullish structure is forming, which corroborates the narrative of improving fundamentals.

For traders, a clear observation path has emerged. First, the bulls must organize strength to conquer the psychological barrier of $2. A successful breakthrough at this position will open up upward space, with the first target being the 50-day EMA at $2.1343. If they can further sustain a breakout above the 50-day EMA, it will signal a strong short-term trend reversal, at which point market attention will turn to the 200-day EMA (around $2.4098) and the resistance area at $2.5. Once the price can strongly break through the resistance of all key moving averages, it will completely confirm the validity of the mid-term bullish structure, paving the way for a long-term target of $3.

On the contrary, if the price encounters resistance again at the $2 level and falls below the recent rising trend line support, it would indicate that the current bullish structure has failed, and the short-term rebound may just be a correction in the downward process. In this case, the price may test the support strength at $1.75 again, or even $1.5. Therefore, $2 has become the “pivot level” that both bulls and bears must strictly defend, and its gain or loss will directly determine the market direction in the next phase.

Overview of the Current Status of the XRP Ecosystem

In addition to paying attention to prices and macro policies, it is also crucial to understand the ecosystem on which XRP relies for survival. XRP is a digital asset advocated by Ripple, designed primarily to become a fast and low-cost cross-border payment settlement tool for financial institutions. Unlike many new cryptocurrencies generated through “mining,” all 100 billion XRP tokens were created in one go at inception, with a significant portion held by Ripple and released periodically through a custodial program. Its consensus mechanism uses a unique Ripple Protocol Consensus Algorithm (RPCA), which does not require energy-intensive proof of work, allowing for extremely fast transaction confirmations, usually completed within three to five seconds, with fees that are almost negligible. In recent years, Ripple has also been actively exploring emerging use cases such as DeFi and NFTs to expand its ecosystem boundaries. The ongoing development of the ecosystem and its adoption rates are fundamental to supporting XRP's long-term value.

Risk Warning: Potential Headwinds Facing Bull Market Narrative

Although the outlook seems optimistic, investors still need to remain vigilant about the risks that could disrupt the bullish narrative. The primary risk comes from an unexpected shift in macroeconomic policy. If the Bank of Japan unexpectedly announces a higher neutral interest rate range (for example, 1.5% to 2.5%) and expresses a stronger determination to combat inflation, it could reignite panic over closing yen arbitrage trades. Similarly, if economic data in the United States performs strongly in the coming months, or if Fed officials release hawkish signals that extinguish expectations for a rate cut in March, risk assets will generally face pressure.

Secondly, there are also variables on the regulatory front. In addition to the “Market Structure Act” potentially facing obstacles in the Senate, if the international index company MSCI decides to remove listed companies holding digital assets as treasury reserves (DATs) from its index, it may weaken the interest of companies in using XRP as a reserve asset, impacting the narrative of institutional demand.

Finally, the capital flow of the market itself is always the biggest uncertainty. If the XRP Spot ETF starts reporting net outflows in a certain week in the future, it will directly undermine market confidence, potentially causing the price to quickly slide to $1.75 and declaring the end of the short-term Rebound trend. In the crypto market, the story and capital flow must synchronize; any divergence from either side could trigger a severe price reassessment.