Is XRP's Short-Term Dip a Buying Opportunity Before a Supply-Driven Rebound?

The cryptocurrency market is no stranger to volatility, and XRP's recent price action has sparked intense debate about whether its short-term correction represents a strategic entry point. With the token trading near $2 and facing a confluence of bearish technical indicators, regulatory uncertainty, and supply-side dynamics, investors must weigh the risks and rewards of accumulating during this dip. Drawing from technical analysis, Elliott Wave patterns, and regulatory developments, this article argues that XRP's current pullback could be a measured opportunity for long-term holders, provided they approach it with discipline and a clear understanding of the macroeconomic forces at play.

Current Price Action and Bearish Momentum

XRP's price has been under pressure in late 2025, with the 14-day RSI at 38.35 and the MACD line at -0.06, signaling a bearish regime. While the RSI is not yet in oversold territory (typically below 30), the slowing MACD histogram suggests that the downtrend's momentum is waning. Key support levels are forming around $1.97 and $1.9, with the former acting as a critical psychological barrier for bulls. A break below $1.97 could trigger a cascade to $1.82, but the immediate focus remains on defending the $2 level, which has historically served as a floor for XRP's price action according to market analysis.

The 50-day and 200-day EMAs at $2.19 and $2.44, respectively, further underscore short-term bearish dominance. However, the price's proximity to the lower Bollinger Band-without extreme levels-indicates that the market is testing its boundaries rather than entering a terminal collapse. This dynamic suggests a potential exhaustion phase, where sellers may lose steam before buyers step in to reestablish control.

Elliott Wave Analysis: Navigating the Correction

Elliott Wave theory provides a compelling framework for understanding XRP's current bearish correction. As of December 2025, the token is in a complex triple three structure, characterized by overlapping corrective waves (W, X, Y, Z) that suggest a larger consolidation phase. For instance, wave W ended at $0.2465, wave X at $0.7913, and wave Y at $0.1763, with wave Z completing at $0.1104. These patterns indicate that XRP may be nearing the end of a multi-year correctionary cycle, particularly against its all-time low.

The triple three structure is often a precursor to a bullish resumption, as it reflects market indecision and a redistribution of supply and demand. If XRP stabilizes above $1.97, it could signal the completion of this correction and set the stage for a test of the $2.28 resistance level-a key threshold for a bullish continuation. Investors should monitor whether the price forms a "double bottom" near $2, which would align with the Elliott Wave's expectation of a reversal in the near term.

Supply-Side Dynamics and Regulatory Tailwinds

Beyond technical indicators, XRP's fundamentals are being reshaped by supply-side mechanisms and regulatory clarity. Ripple's controlled release of XRP from escrow-1 billion tokens scheduled for January 1, 2026-has historically limited volatility, as the company typically relocks 60–80% of the unlocked supply. This disciplined approach contrasts with uncontrolled dumping, which could exacerbate bearish pressure. Meanwhile, the XRP Ledger's transaction fee burning mechanism is reducing circulating supply, creating a deflationary tailwind.

Regulatory developments further bolster the case for accumulation. The resolution of the SEC vs. Ripple lawsuit in August 2025 provided a legal framework for XRP, while Ripple's conditional approval from the U.S. Office of the Comptroller of the Currency (OCC) to establish a national trust bank has introduced institutional credibility. Although ETF approvals remain delayed due to a government shutdown, analysts expect these to materialize once the SEC resumes full operations. Such developments could catalyze ETF inflows, increasing demand for XRP and amplifying its supply-driven rebound.

Strategic Entry Points and Risk Management

For investors considering a strategic entry, the $1.97–$2.00 range represents a high-probability zone for accumulation. A bullish breakout above $2.28 would validate the Elliott Wave's reversal thesis and align with the 50-day EMA at $2.19. However, risk management is critical: a close below $1.97 would invalidate the short-term bullish case and expose the $1.82 support level. Position sizing should reflect this volatility, with stop-loss orders placed below key support levels to mitigate downside risk.

Long-term holders should also consider the macroeconomic context. XRP's adoption in cross-border payments via RippleNet and On-Demand Liquidity (ODL) could drive utility-driven demand, particularly if institutional adoption accelerates. While bearish risks-such as regulatory setbacks or valuation disconnects-persist, the confluence of technical exhaustion, supply-side discipline, and regulatory tailwinds creates a compelling case for measured accumulation.

Conclusion

XRP's short-term dip is a product of bearish momentum, regulatory uncertainty, and a broader market selloff. However, the technical indicators, Elliott Wave patterns, and supply-side dynamics suggest that this correction may be nearing its end. For investors with a 2026 time horizon, the $1.97–$2.00 range offers a strategic entry point, provided they implement strict risk management and monitor key resistance levels. While the path to $5–$8 by 2026 is not guaranteed, the interplay of controlled supply, regulatory clarity, and institutional adoption makes XRP a compelling candidate for a supply-driven rebound.