XRP's Market Setup Could Spark the Biggest Bear Trap Ever—Here's What It Means

Trading strategist ChartNerd recently highlighted what could be XRP’s most significant bear trap setup in its history. The observation underscores a critical gap between what price action appears to show and what market structure actually reveals beneath the surface. Currently trading around $2.08, XRP has exhibited confusing dynamics that have misled many traders into defensive positions.

Understanding the Bear Trap Mechanics

A bear trap is a deceptive price pattern. It tricks sellers into believing a sustained downward move is occurring, only to reverse sharply higher and inflict losses on short positions. The mechanism works through liquidity exhaustion—as sellers aggressively exit, they drain available selling pressure. Once supply dries up, buyers return with force, and the price rebounds violently. These traps typically materialize near established support zones where psychological selling is heaviest.

XRP demonstrated this exact behavior during July’s action. The asset surged to $3.65 before collapsing below $3, creating panic among weak holders. However, the decline proved temporary. Fresh buying stepped in once capitulation completed, and the price rebounded quickly. ChartNerd suggests this dynamic is repeating now, but on a potentially larger scale.

The Current Pattern Repeating

Throughout December, XRP has repeatedly tested downside levels without following through convincingly. Each dip attracted aggressive buying faster than many expected, triggering snap-back recoveries. This pattern—dip, pause, bounce—weakens the bearish thesis significantly.

The asset repeatedly broke below key support zones only to reclaim them within hours or days. Each false breakdown removed more weak sellers from the market. Simultaneously, each recovery encouraged sideline capital to contemplate re-entry. This combination creates the conditions for explosive repricing when conviction shifts.

The pattern differs sharply from a true breakdown, where lower lows build momentum and attract fresh selling. Instead, XRP shows the opposite: breakdown attempts attract buyers, not sellers.

What Happens When the Trap Springs

If this bear trap thesis proves accurate, the next phase involves rapid acceleration. Short-sellers covering positions simultaneously with new buyers creating buying momentum could push XRP significantly higher in compressed timeframes. Market participants caught offside often rush to exit poor positions, amplifying the move.

Observers have positioned themselves for meaningful XRP strength entering 2026. A confirmed bear trap here could serve as the catalyst that initiates substantial upside movement across the new year. The setup combines technical structure, exhausted selling pressure, and positioned capital waiting for confirmation—classic ingredients for significant repricing events.

The question for traders now is whether XRP’s recent consolidation and repeated bounce pattern represents capitulation before a larger move, or merely a pause in a broader decline. ChartNerd’s framework suggests the former.