Is there a 34% upside potential for XRP? The technical pattern is there, but this risk cannot be ignored.

XRP experiences a technical correction after an initial rally, but a classic inverse head and shoulders pattern is forming. If buying pressure continues to support, the theoretical upside is about 34%, with targets ranging from $3.19 to $3.34. However, on-chain data reveal a hidden risk: short-term speculative funds are rapidly flowing in, which could introduce uncertainty during the breakout process. Currently priced at $2.13, it still has some distance from the key resistance level. Whether the breakout can proceed smoothly depends on whether medium- to long-term buying can dominate the market.

Technical Conditions of the Inverse Head and Shoulders Pattern

From the chart structure, XRP is building the right shoulder of the inverse head and shoulders. The validity of this pattern relies on a clear condition: the price must stay above $1.77. If this support is broken, the entire pattern logic will invalidate.

Key price levels are summarized as follows:

Once the price breaks above $2.54 with volume, the target zone points to $3.19-$3.34. But this process is not linear. First, it needs to effectively surpass $2.46 to open the path above $3.

Positive Signals from Technical Indicators

The technical outlook shows signs supporting a breakout. The 20-day exponential moving average (EMA) is rising and approaching the 50-day EMA. Once a golden cross confirms, it typically indicates strengthening medium-term momentum. Since EMA is more sensitive to recent prices, such a crossover during consolidation often favors trend continuation rather than a false breakout.

The Money Flow Index (MFI) has been rising since early November, which is a more noteworthy signal. Even if the price pulls back, capital continues to flow in, indicating accumulation at lower levels. Recent data show XRP has gained 15.49% over the past 7 days. Although it fell 6.52% in the last 24 hours, this correction is a necessary part of pattern formation.

On-Chain Data: Large Holders Accumulating vs Short-term Speculation

On-chain data further reinforce the accumulation phase but also expose market vulnerabilities.

Rational behavior of large holders

Addresses holding between 1 million and 10 million XRP have been steadily increasing since early January, with balances growing slightly but consistently. More critically, large holders with 10 million to 100 million XRP reduced their holdings during the rally but re-entered during the current consolidation, adding about 60 million XRP, worth roughly $130 million. This behavior—buying during consolidation rather than chasing highs—is generally seen as a positive sign for a structural breakout. Their logic is clear: accumulate at low levels and wait for a breakout.

Hidden risks from short-term speculation

The real risk comes from short-term traders. HODL Waves data show that addresses holding from one day to one week are increasing rapidly, indicating a rise in short-term speculative funds. What does this mean? It can cause frequent selling pressure near key resistance levels, slowing the breakout. When XRP approaches $2.46 or $2.54, short-term funds may take profits, creating resistance for the breakout.

This contrast is stark: large holders calmly accumulate at lows, while short-term funds flood in during upward moves. Whether the breakout proceeds smoothly largely depends on which side can dominate the market.

Conditions for a Breakout

Achieving a 34% increase requires meeting these conditions:

• Price must effectively stay above $2.46, opening the path above $3
• Break above $2.54 with volume to prevent false breakouts
• Medium- to long-term buying must remain dominant, with short-term speculation kept in check
• Support at $1.77 must hold; otherwise, the pattern invalidates

Summary

The inverse head and shoulders pattern for XRP is technically sound, with a potential upside of about 34%. The accumulation behavior of large holders during consolidation indicates confidence in the future trend. However, whether this rally can proceed smoothly depends on whether medium- to long-term buyers can maintain control and whether short-term speculative volatility can be subdued.

Currently, XRP is at a critical balance point. The next move hinges on whether the key resistance at $2.46 can be broken effectively. If a successful breakout occurs with volume, targets of $3 or higher become plausible; if resistance persists, the price may continue to oscillate around $2.13. Future focus should be on volume changes and whether large holders continue to act steadily.