Is XRP Poised for a Rebound at $2 Amid Regulatory Gains and Weak On-Chain Demand?

The XRP price has long been a barometer for the broader crypto market's regulatory and technical dynamics. As of late 2025, the token finds itself at a critical juncture: a regulatory settlement with the SEC, the approval of spot XRP ETFs, and a fragile liquidity environment have created a complex backdrop for potential price movement. With the token hovering near the $2.00 psychological support level, investors are scrutinizing whether XRP can mount a sustainable rebound-or if structural weaknesses will drag it further downward.

Fundamental Catalysts: Regulatory Clarity and Institutional Adoption

The resolution of the SEC vs. Ripple case in August 2025 marked a watershed moment for XRP. By ruling that XRP is not a security in public retail transactions, the court provided much-needed clarity for the crypto market, while the $50 million settlement and permanent injunction on institutional sales signaled a shift toward compliance-driven growth according to the settlement details. This regulatory resolution coincided with a surge in institutional interest, as U.S. asset managers secured approvals for spot XRP ETFs. These products attracted over $1 billion in assets within four weeks, driven largely by institutional investors. Ripple CEO Brad Garlinghouse emphasized that the ruling "legitimizes XRP as a regulated investment product," a sentiment echoed by analysts who view the ETF inflows as a catalyst for increased liquidity and price discovery according to market analysis.

However, the fundamental narrative is not without shadows. Whale selling activity and muted retail participation have created a tug-of-war between institutional accumulation and short-term volatility according to market analysis. On-chain data reveals that over 1.32 billion XRP tokens were withdrawn from exchanges in late 2025, signaling accumulation by long-term holders according to CoinDesk reporting. Yet, the supply in profit has dropped to 42%, the lowest in over a year, reflecting growing anxiety among long-term investors according to CoinDesk reporting. This duality-strong institutional demand versus weak retail sentiment- creates an asymmetric risk profile for XRP.

Technical Analysis: A Fragile Foundation at $2.00

From a technical perspective, XRP's price action in late 2025 paints a picture of consolidation and cautious optimism. The token has formed a contracting triangle pattern, characterized by lower highs and higher lows, with key support levels at $2.70 and $2.20 according to technical analysis. A breakout from this pattern could trigger significant price movement, either upward or downward. Currently, XRP trades above the EMA(7) at $2.2294 but remains below the EMA(25) and EMA(99), suggesting a short-term bullish bias but medium-term resistance according to technical analysis.

The RSI, a critical momentum indicator, hovers in the low 40s, indicating accumulation rather than panic selling according to technical analysis. This neutral reading aligns with the formation of a potential double-bottom pattern between $1.80 and $1.88, a historical support zone that has shown resilience during low-liquidity periods according to market analysis. However, the 50-day and 200-day moving averages remain bearish, forming a "death cross" that underscores the broader downtrend according to technical analysis. Analysts like Ali Martinez caution that a breakdown below $2.00 could trigger a retest of the $1.95 level, where ETF-driven buying may reappear according to CoinDesk reporting.

Order book dynamics further complicate the technical outlook. While major exchanges like Binance and Coinbase report daily trading volumes of $2.8 billion, liquidity remains fragile during periods of stress. A prior episode in late 2024 saw the price collapse from $2.50 to $1.19 due to thin order books according to FastBull analysis. This vulnerability highlights the risks of a low-liquidity environment, where large institutional trades can disproportionately impact price.

Low-Liquidity Environment: A Double-Edged Sword

The interplay between liquidity and price rebounds is particularly pronounced for XRP. Historical case studies from 2020–2025 show that the token has rebounded at the $2.00 level during low-liquidity periods, often driven by institutional absorption of selling pressure according to market analysis. For instance, a 251% surge in trading volume during a critical price defense at $2.00 confirmed heavy institutional participation, while a V-shaped rebound into the $2.07–$2.08 range validated active demand according to market analysis.

However, the same liquidity constraints that enable rebounds also amplify downside risks. A 9% rebound in late December 2025 was accompanied by a $1.32 billion drop in exchange reserves, reducing the supply available for trading and increasing the asset's vulnerability to sharp movements according to crypto news reporting. This dynamic is further exacerbated by the divergence between strong institutional demand and muted retail participation, creating a scenario where XRP's price could either consolidate at $2.00 or face renewed selling pressure if key support levels fail according to market analysis.

The Path Forward: Balancing Optimism and Caution

The potential for an XRP rebound hinges on three critical factors:
1. Regulatory Momentum: The approval of spot XRP ETFs has already demonstrated institutional confidence, but sustained inflows will depend on macroeconomic conditions, such as Fed policy and global liquidity shifts according to technical analysis.
2. Technical Confirmation: A clean breakout above $2.11-resistance formed by the 20-month EMA-could trigger momentum toward $2.20–$2.26, while a breakdown below $2.00 risks a retest of $1.95 according to CoinDesk reporting.
3. Liquidity Resilience: Improved order book depth on major exchanges suggests structural relevance, but thin liquidity during stress events remains a wildcard according to FastBull analysis.

Analysts project a base-case scenario of $3.50–$4.50 and a bullish case of $6–$8 if ETF inflows mirror Bitcoin and Ethereum's post-approval trajectories according to market analysis. However, these projections assume a stable macroeconomic environment and sustained institutional demand-conditions that remain uncertain in a low-liquidity context.

Conclusion

XRP's position near the $2.00 support level reflects a delicate balance between regulatory optimism and technical fragility. While the approval of spot ETFs and Ripple's institutional expansion provide a strong fundamental foundation, the token's price remains sensitive to liquidity dynamics and macroeconomic shifts. For investors, the key will be monitoring whether institutional buyers continue to absorb liquidity at critical support levels or if the market's structural weaknesses dominate. In this high-stakes environment, patience and a close watch on $2.00 may prove to be the most prudent strategy.