How XRP Went From a Cycle Low to a Three-Month High in Four Days

Trump Backed the CLARITY Act

On August 20, President Trump publicly urged Congress to pass the CLARITY Act while attending an event with Ripple CEO Brad Garlinghouse. The bill, which would classify XRP and most digital assets as commodities under federal law, had stalled in the Senate until Senate Majority Leader John Thune filed a cloture motion, the procedural step needed to force a vote, scheduled for September 15.

The market read the President’s comments as a sign the bill has executive support behind it heading into September. XRP added to its gains within hours, while prediction markets cut the odds they assign to another delay.

Whales and ETFs Bought Together

Wallets holding between 1 million and 10 million XRP added roughly 300 million tokens during the 96 hours leading into August 21, according to crypto analyst Ali Martinez. That purchase was worth close to $400 million at the time.

Meanwhile, XRP ETFs pulled in more than $39.78 million across four days, including a single-day inflow above $18 million on August 21, the largest one-day total in two months.

Both sets of buyers shrink the supply available to sell into the rally, so the same new demand pushes the XRP price further than it would if more coins were available.

Short Sellers Got Squeezed

Some traders borrow XRP, sell it immediately at the current price, and buy it back later at a cheaper one to pocket the difference, a trade called shorting that only pays off if the price falls. When the Treasury’s bond buyback news sent yields lower and XRP started rallying on August 19, those short sellers began losing money.

Once a trader’s loss crosses a set limit, the exchange closes the position automatically, and closing a short means buying the coin back immediately at whatever it costs. Across the three sessions between August 19 and 21, more than $3.3 billion of short positions closed out that way, adding to the buying already in the market.

Can XRP Hold Its Three-Month High?

We think XRP holds its three-month high until at least the September 15 cloture vote. Falling Treasury yields, a short squeeze that has already played out, and whales and ETFs shrinking the available exchange supply are enough to hold the $1.29 floor without any new catalyst.

The absence of a new catalyst also caps the upside. A large block of buyers entered near $1.48 on the way down and has been underwater since, and XRP has only just climbed back to that level. Holders who have waited months to get their money back tend to take it, which puts a wall of selling right where the price is now.

However, our view changes if Democrats vote down the cloture motion on September 15, or if a hot inflation report pushes Treasury yields back above 5.3%. Either event would break the $1.29 floor, and the XRP price could fall to $1.20.

XRP trades at $1.50, above $1.48, so those buyers are already in profit and the sentence no longer works. It now explains the mechanic instead of asserting it. A block of buyers entered near $1.48 on the way down and has been underwater since, XRP has only just climbed back to that level, and holders who have waited months to get their money back tend to take it. 

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