XRP's Potential Pre-Regulatory Rally: A Strategic Buy Before the CLARITY Act Markup

The XRP market is poised for a pivotal moment as the CLARITY Act, a landmark U.S. digital asset regulatory framework, inches closer to Senate approval in early 2026. With the House having passed the bill in July 2025 and the Senate delaying its markup until January 2026, XRP investors are left navigating a landscape of anticipation and uncertainty. Historical patterns suggest that regulatory clarity-particularly for a token as contested as XRP-often triggers sharp price surges before official rulings. This article argues that the current environment presents a strategic opportunity to position for a potential pre-CLARITY Act rally, leveraging XRP's unique role in cross-border payments and its demonstrated sensitivity to regulatory developments.

Historical Precedents: XRP's Price Reacts to Regulatory Clarity

XRP's price history is a masterclass in how regulatory outcomes shape market sentiment. The most notable example is the August 2025 settlement between Ripple and the SEC, which confirmed XRP's non-security status for secondary market sales. This resolution triggered a 132% surge in XRP's price, propelling it to a seven-year high of $3.40. Similarly, the July 2024 court ruling-which partially exonerated Ripple by distinguishing between institutional and retail XRP sales-spurred a 27% rally to $1.27. These events underscore a recurring pattern: XRP tends to rally before regulatory clarity, as investors anticipate favorable outcomes and institutional adoption accelerates.

The "buy the rumor, sell the news" dynamic is particularly pronounced for XRP. For instance, in the weeks leading up to the July 2024 ruling, on-chain activity surged, with active wallet addresses jumping from 40,000 to 295,000. Whale activity also spiked, with 2,700 wallets holding over 1 million XRP-a sign of institutional confidence. This anticipatory buying suggests that XRP's price often peaks ahead of actual regulatory decisions, creating a window for strategic entry.

Current Market Dynamics: CLARITY Act Delays and XRP's Position

The CLARITY Act's delayed Senate markup has created a vacuum of regulatory certainty, yet XRP's fundamentals remain robust. As of late November 2025, XRP ETF inflows have exceeded $1 billion, reducing exchange balances by 45% and tightening liquidity. This trend mirrors the post-2024 rally, where ETF launches in September 2025 catalyzed institutional interest. Meanwhile, Ripple's On-Demand Liquidity (ODL) network has processed over 251 million transactions in Q1 2024, a 108% increase from the prior quarter, reinforcing XRP's utility in cross-border payments.

However, the CLARITY Act's Senate delay has introduced volatility. While the House version of the bill classifies digital assets into three categories (commodities, securities, and stablecoins), the Senate's competing drafts-such as the Responsible Financial Innovation Act (RFIA) and the Agriculture Committee's CFTC-focused framework-introduce ambiguity according to legislative tracking. This uncertainty has led to cautious bearish sentiment, with 73% of Gemini users expecting XRP to trade between $1.50 and $2.00 in late December 2025. Yet, this hesitation may present a buying opportunity.

Strategic Timing: Why Now?

The key to capitalizing on XRP's potential lies in timing the market ahead of the CLARITY Act's Senate markup. Historical data shows that XRP's price often peaks before regulatory clarity, as seen in the 2024 and 2025 cycles. For example, in July 2025, XRP surged to $3.65 amid growing expectations of a favorable SEC settlement, only to consolidate as the actual ruling approached. Similarly, the November 2025 ETF launches coincided with selective inflows of $62.9 million into XRP, despite broader crypto outflows. These patterns suggest that investors are already positioning for the CLARITY Act's eventual passage.

Moreover, the CLARITY Act's potential to classify XRP as a commodity-rather than a security-could unlock new use cases. If the CFTC assumes oversight, XRP may gain broader institutional adoption, particularly in derivatives and stablecoin markets according to policy analysis. This contrasts with the SEC's enforcement-heavy approach, which has historically stifled innovation. Analysts like Zach Rector argue that XRP's next major rally will likely occur before the CLARITY Act becomes law, echoing the "buy the rumor" playbook.

Risks and Counterarguments

Critics caution that the CLARITY Act may not fully resolve XRP's regulatory status. The Senate's competing drafts lack consensus on token classification, and the SEC's retained authority over investment contracts could reintroduce ambiguity according to policy analysis. Additionally, XRP's recent struggles to break above $2.00-despite ETF inflows-highlight structural resistance. However, these risks are inherent to the pre-CLARITY Act environment and do not negate the asset's long-term potential.

Conclusion: Positioning for the Next Rally

XRP's history of surging ahead of regulatory clarity, combined with the CLARITY Act's delayed Senate timeline, creates a compelling case for strategic entry. Investors who act now-before the January 2026 markup-can capitalize on the "buy the rumor" dynamic, leveraging XRP's utility-driven fundamentals and institutional adoption trends. While the path to $5–$10 by 2026 is not guaranteed, the interplay of regulatory anticipation, ETF inflows, and cross-border payment demand makes XRP a high-conviction play for those willing to time the market ahead of the CLARITY Act's resolution.