XRP's Market Structure May Hide the Biggest Bear Trap in Its History

At $2.07 with a 24-hour decline of 0.62%, XRP’s current price action tells an interesting story to those willing to dig deeper. While surface-level observers see weakness, market technicians like ChartNerd have identified patterns suggesting something quite different may be unfolding beneath the charts.

Understanding How Bear Traps Work

A bear trap operates on a simple but brutal mechanism: price breaks lower, triggering capitulation from weak hands and aggressive short positions. The breakdown initially appears convincing—support crumbles, panic spreads, and bears feel validated. But the followthrough never materializes. Instead, demand resurfaces unexpectedly. Bears find themselves underwater on positions they just opened, forced to cover at losses while sidelined capital rushes back in to buy the dip.

These traps typically materialize near critical support zones where fear peaks and conviction weakens. They’re powered by emotion rather than fundamental deterioration, and they’re most devastating when price refuses to confirm what the charts initially promised.

XRP’s Track Record with False Breakdowns

The asset demonstrated this exact dynamic in July, when price plunged below prior resistance before recovering with surprising speed. That month, XRP peaked near $3.65 before dropping below $3—a move that forced aggressive sellers out just before the quick reversal.

More recently, December showed similar patterns. XRP tested downside support levels repeatedly, each time attracting fresh buying demand that halted declines faster than bears anticipated. Flash crashes followed by swift recoveries now characterize the price action, and each failed breakdown weakens the bearish thesis considerably.

Why This Could Be the Largest Bear Trap Yet

ChartNerd’s analysis suggests the current setup contains all the ingredients for an extraordinarily painful squeeze. The combination of persistent support-holding, repeated failed breakdowns, and mounting short positioning creates the structural foundation for rapid repricing. The flow from forced short covers alone could drive explosive moves northward.

What Comes Next in Early 2026

Once bear traps fully trigger, the repricing phase typically arrives with urgency. Shorts panic-cover simultaneously, sidelined buyers regain confidence, and fresh capital accelerates off the lows. Market participants caught on the wrong side wake up fast. With XRP’s current market cap at $125.83B and expectations running high for 2026, the technical setup could catalyze a significant move that catches many traders completely off guard.