XRP holds $1.35 as $1.70 spike proves a liquidity mirage

XRP held above $1.35 after a brief spike to $1.70 proved a liquidity mirage driven by thin order books and a short squeeze.

"A dramatic number does not require a dramatic amount of money," Kamilah Stevenson, a wealth-focused commentator known as The Wealth Doctor, said. "It can simply reflect an absence on the other side."

About $3 billion in crypto positions were liquidated in one day, with roughly 92% tied to traders betting against the market. Over four days, short liquidations totaled about $3.78 billion versus $687 million in long liquidations, Stevenson said. XRP open interest remains near $3.6 billion, with the largest exchange seeing open interest rise nearly 28% and 72% of accounts positioned long before a dip.

XRP must hold the $1.35 to $1.38 support zone to preserve the bullish setup, with a retest of $1.70 possible if ETF inflows persist. The U.S. Senate votes on the CLARITY Act on September 15, a decision that could reshape the regulatory treatment of digital assets.

The token climbed from roughly $1 to $1.50 before the brief spike around midnight Central Time, then pulled back sharply. The reported roughly 37% downside wick reflected selling hitting a thin book on one venue rather than a broad market-level collapse, Stevenson said.

Stevenson attributed the broader crypto rally to three factors: a U.S. Treasury announcement on buying back longer-dated debt, which lowered interest rates; a more constructive policy tone following a White House crypto meeting and discussion of the CLARITY Act; and a heavily short-positioned derivatives market.

Forced buying from liquidated shorts can create a self-reinforcing rally: rising prices close short positions, which requires more buying and pressures the next group of shorts. Stevenson stressed this does not necessarily mean a sudden wave of new long-term conviction in XRP.

ETF inflows and falling reserves tighten XRP supply

Spot XRP ETFs recorded $110.49 million in weekly net inflows for the week ending August 28, their strongest result of 2026, bringing cumulative inflows to about $1.66 billion. Bitwise's XRP ETF remains the largest with cumulative inflows topping $600 million, while Franklin's XRPZ saw $462.86 million.

XRP exchange reserves have declined from about 2.8 billion to 2.6 billion, reducing the supply readily available on exchanges. The combination of declining reserves and strengthening ETF demand suggests a tighter supply-demand balance.

Breakout confirmed, but $1.37 is the line in the sand

Crypto analyst Ali Martinez confirmed XRP's breakout above a falling trendline on the 1-hour chart, with $1.70 as the next target. The first hurdle sits between $1.43 and $1.50; a move through that range would strengthen the breakout. If XRP reaches $1.70 and breaks it with strong buying, the next upside areas are around $2.09 and $2.35.

The setup weakens if XRP loses $1.37. A decisive break below that level could send the token toward $1.20.

Derivatives data adds another signal. XRP climbed despite deeply negative spot and futures cumulative volume delta, which fell to about $5.89 billion on futures and $1.70 billion on spot, suggesting sellers are being absorbed. Open interest surged toward $1.4 billion during the rally before cooling to around $1.2 billion, indicating some leverage has already been removed.

For traders, the divergence between price and volume data means the next move could be sharp in either direction. If XRP holds $1.35 to $1.38 with ETF inflows remaining strong and CVD improving, a retest of $1.70 is plausible. A break below support with accelerating CVD losses would warn that sellers are gaining control.

This article is for informational purposes only and does not constitute investment advice.