XRP Could Be Staging History's Biggest Bear Trap—What Traders Need to Know

The market is sending mixed signals on XRP right now. On the surface, it looks weak. Price struggles near support, sellers seem aggressive, and traders are positioning defensively. But dig deeper into the market structure, and you might find something entirely different unfolding.

ChartNerd (@ChartNerdTA), a well-known technical analyst, recently flagged a concerning possibility: XRP could be executing the biggest bear trap in its entire history. His observation arrives during a period of choppy trading marked by repeated breakdown attempts that simply haven’t held.

Understanding the Bear Trap Mechanic

So what exactly is a bear trap? It’s deceptively simple: price action fakes a breakdown, panic sellers rush in, and then—boom—the asset reverses sharply higher. The bears get caught holding losing positions while shorts are forced to cover at unfavorable levels.

This pattern thrives on fear rather than fundamental deterioration. It typically materializes when price violates a key support level but fails to sustain the move lower. The initial dip draws aggressive shorting, building liquidity that eventually gets liquidated when sentiment flips.

XRP actually demonstrated this exact dynamic in July 2025. The asset had climbed to $3.65 before a sudden plunge terrified holders into selling near $3. That panic proved premature—the asset quickly rebounded as the retail capitulation ended. ChartNerd suggests current conditions bear striking similarities.

The Repetitive Pattern Pointing to a Setup

Here’s what’s been happening recently: XRP probes lower support zones, triggers stop losses and short accumulation, then snaps back up just as quickly. This isn’t just random volatility—it’s the signature of weak sellers being exhausted in waves.

Each attempted breakdown has attracted fresh buying interest faster than typical bearish follow-through would suggest. The asset keeps reclaiming levels it “lost,” which weakens the bearish narrative considerably. At current trading levels around $2.08, the flow of capital actually suggests accumulation rather than distribution.

Volatility in December has been notable, but importantly, XRP hasn’t broken decisively below prior support. It tests, fails to sustain, and recovers. That pattern repeats. For bears to be right, they’d need decisive breakdown confirmation—and it keeps failing to materialize.

What Happens When the Trap Snaps

If the biggest bear trap thesis proves correct, the subsequent repricing could be dramatic. Once shorts recognize they’re wrong and begin covering positions, combined with sidelined capital rushing back in, price movement can accelerate violently higher. This phase often catches traders completely off guard because it’s fast.

Looking ahead to 2026, market participants maintain elevated expectations for XRP. Should this setup indeed be the massive bear trap ChartNerd identified, it could very well trigger a significant breakout as the new year takes shape.

The technical setup continues to suggest more to this story than the surface-level bearishness implies.