Why XRP Rallies Currently Face Challenges: Key Changes Needed for Lasting Recovery

XRP has struggled to surpass the vital short-term resistance level of $1.60 over the past week, resulting in a decline of approximately 8% and placing it back in the trading range of $1.35 to $1.40. Market analyst Sam Daodu highlights three interrelated issues that explain the reasons behind the recent rally's stall and what changes are necessary for a sustainable recovery.

Key Takeaways

Bitcoin Dominance: Bitcoin's market dominance is still high, preventing capital from moving into altcoins.
Profit-Taking from Whales: Large holders have been cashing out since XRP's peak at $3.65, contributing to downward pressure.
Regulatory Developments Needed: To boost institutional adoption and spark new demand for XRP, regulatory clarity, particularly concerning the upcoming CLARITY Act, is essential.

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High Bitcoin Dominance is a Barrier for XRP

One critical factor limiting XRP's advancement is Bitcoin's (BTC) persistent dominance, which has remained at around 58.6% for much of 2026. This dominance needs to dip below 50% to trigger a rally in altcoins, including XRP, as capital typically shifts from Bitcoin to smaller tokens only during such times. Currently, there has been no significant movement in this regard; institutions seem reluctant to invest in altcoins and are either withdrawing from the crypto market or consolidating funds in Bitcoin, viewed as a safe asset. Daodu argues that until Bitcoin breaks above $75,000 decisively and maintains this position, XRP's foundational strengths are unlikely to drive significant price changes.

Profit-Taking from Large Holders

Additionally, major holders, or "whales," have been actively profiting since XRP peaked at $3.65 in July 2025. Daodu estimates that around $6 billion worth of XRP has been offloaded by these large traders since that height, with consistent sell volumes amplifying the selling pressure. Many of these whales entered the market at prices below $0.65, making them more likely to sell during price rallies to secure profits, which restricts the potential for sustained price increases.

Underwater Holders Create Selling Resistance

Moreover, a significant number of XRP holders currently hold assets at a loss, contributing to persistent resistance in the market. Data from Glassnode indicates that 60% of XRP currently in circulation is held at prices above its current valuation, with the average hold cost around $1.44. This average aligns closely with XRP's recent trading range, leading to selling activity as prices near breakeven points, with many opting to liquidate their holdings around the $1.45 level.

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XRP’s downward price trend shown on the daily chart. Source: XRPUSDT on TradingView.com

ETFs Struggle to Absorb Supply

Daodu also points out that even if XRP breaks past the $1.45 threshold, significant selling pressure is likely to persist. Many holders within the $1.40 to $3.65 range will be looking to recoup losses, creating new resistance levels.

Furthermore, exchange-traded funds (ETFs) tied to XRP have added another layer of structural challenges. The total assets under management (AuM) for these ETFs have dropped from their peak of $1.65 billion in January to approximately $1 billion due to the falling token price. At the current rate of inflows—around $1.9 million weekly—ETFs might only increase by about $100 million by the end of the year, which Daodu suggests is not enough to adequately absorb the ongoing supply.

A Potential Turning Point

Looking ahead, Daodu identifies a possible catalyst that could alter the current dynamics: the eagerly anticipated US crypto market structure bill known as the CLARITY Act. This bill has faced considerable opposition in recent months due to key provisions hindering its progress. If enacted, and should it classify XRP as a commodity definitively, this would help alleviate regulatory uncertainties and could lead to broader institutional adoption. Such developments might also encourage banks to utilize XRP for transactions instead of alternatives like Ripple's RLUSD stablecoin, potentially creating the demand necessary to drive prices higher.

In summary, according to Daodu, XRP's path to recovery depends on several factors aligning: a shift of capital away from Bitcoin, reduced selling pressure from large holders, increased ETF inflows, or significant regulatory progress that invites institutional participation. Until these elements converge, the analyst warns that XRP's rallies are likely to remain fleeting, leaving the token stuck within its recent trading range.

Featured image from OpenArt, chart from TradingView.com.