XRP's $2.00 Test: A Tactical Setup for the Clarity Act Hearing

The immediate setup is defined by a single, high-stakes event: the Senate Banking Committee's markup hearing for the Clarity Act this Thursday. This isn't a distant policy debate; it's the first major test for a draft bill that could fundamentally alter XRP's regulatory standing. The key provision would classify XRP as a "non-ancillary" asset if it's included in a U.S. exchange-traded product, granting it a compliance status parallel to Bitcoin and Ethereum. The market's price action suggests it is already pricing in the risk of this pivotal vote.

XRP is trading near $2.058, down 13% from its January 6 peak. More critically, it is facing its seventh straight session of declines and has broken below the 50-day EMA at $2.07, a technical signal that momentum has turned bearish. The immediate target is the critical $2.00 support level, a psychological and technical barrier that has capped rallies in past cycles. A break below this level opens the door to further downside, with the next major support at November lows around $1.90.

This creates a clear tactical setup. The price decline reflects a market digesting the uncertainty of the Clarity Act vote. If the bill passes the markup with its key "non-ancillary" provision intact, it could act as a powerful catalyst to reverse the downtrend and defend the $2.00 level. The setup hinges on this event-driven catalyst resolving the regulatory overhang that has shadowed the asset.

Technical Setup: The $2.00 Line and Liquidation Cluster

XRP is trading near $2.06, but the real battleground is the $2.00 support. A dense, high-risk zone of long liquidations sits just above that level, representing approximately $25.4 million in leveraged positions. A decisive break below this cluster would trigger forced selling, amplifying the downtrend and likely tilting sentiment decisively bearish.

This technical breakdown is confirmed by the loss of key moving averages. The asset has broken below the 50-day EMA at $2.07, a signal that momentum has turned bearish and a deeper correction is underway. The immediate target is the psychological and technical barrier at $2.00, with the next major support at November lows around $1.90.

Resistance, meanwhile, is concentrated at higher levels. Key resistance stands at $3.02 (R1) and $3.07 (R2), with the strongest support at $2.78 (S3). These levels are critical for any potential reversal, but they are distant from the current price action. For now, the setup is one of vulnerability, where a move into the liquidation zone could accelerate a drop toward the $1.90 support.

Catalysts and Risks: The Setup

The defined outcomes for the thesis are binary and hinge entirely on price action relative to the Clarity Act catalyst. A decisive break above the $2.00 level would invalidate the immediate bearish thesis. It would signal that the regulatory overhang is being resolved in a positive manner, likely triggering a rally toward the first major resistance at $3.02 (R1). This move would be supported by the asset's strong correlation with other crypto assets like Dogecoin and NEAR Protocol, which could amplify the upward momentum.

Conversely, a break below $2.00 is the primary bearish trigger. This would activate the dense cluster of leveraged longs, representing approximately $25.4 million in forced liquidations. The resulting cascade of selling would accelerate the downtrend, tilting sentiment decisively bearish and opening the path toward the next major support at November lows around $1.90. The setup is one of high risk, where a move into the liquidation zone could quickly compound losses.

The watchpoints are twofold. First, monitor the price action around the $2.00 level for a breakout or breakdown signal. Second, and more importantly, watch exchange supply and spot ETF flows for signs of underlying demand. These have been the key drivers of XRP's 2026 surge, with spot ETF inflows surpassing $1 billion and exchange reserves dropping to multi-year lows. Recent data shows an increase in green bars, signaling net outflows from exchanges-a sign of accumulation. If this trend of underlying demand persists even amid the current volatility, it provides a fundamental floor that could limit the downside from a breakdown. The catalyst is the Clarity Act vote; the risk is the liquidation cluster; the ultimate support comes from the market's own buying behavior.