XRP Survived a 37% Flash Crash. Now Everything Runs Through $1.35.

XRP rose from $1.00 to $1.6963 in four days, touching $1.70 on August 22. Then on August 22, it got knocked down 37 percent in a single session, wiping out roughly $500 million in leveraged long positions. It hasn't fully recovered. As of late August, XRP trades around $1.42, down from that peak but still up roughly 40 percent from the pre-rally base.

Here is the thing the chart is now asking: is this a violent pause in a rally that has institutional backing, or is it the top of a bull trap that will send buyers scrambling for an exit?

Everything runs through $1.35.

What the rally was built on

The mid-August move wasn't random. Four catalysts arrived within 72 hours:

Treasury buyback expansion. On August 19, Treasury Secretary Scott Bessent announced that long-term bond buybacks would double to at least $4 billion per session. The 30-year yield dropped to 5.19 percent, triggering a rotation into risk assets and liquidating over $3 billion in crypto short positions.

The White House crypto summit. The same day, Ripple CEO Brad Garlinghouse sat across from SEC Chairman Paul Atkins and members of Congress to advance the CLARITY Act, legislation that would classify XRP as a digital commodity under CFTC oversight. XRP jumped roughly 30 percent in the two days after.

Whale accumulation. Addresses holding 1 to 10 million XRP accumulated approximately 380 million tokens during the week of August 18. Exchange outflows exceeded 240 million XRP since the start of summer, with whale transfers to Binance at 2021 lows.

ETF inflows. U.S. spot XRP ETFs recorded $39.78 million in net inflows for the week ending August 22, their strongest since May, bringing cumulative inflows since the November 2025 launch to roughly $1.55 billion across seven approved funds.

A 56 percent rally in five days, fueled by four simultaneous catalysts, is the kind of move that creates both conviction and dangerous leverage. This was XRP's strongest weekly performance in 21 months. It also made the market "dangerously overexposed," as one trading desk described it.

The flush wasn't a fundamental breakdown

The August 22 crash was a leverage event, not a valuation one. Futures open interest had built to roughly $3.45 billion, with 71.8 percent of accounts holding long positions and a long-to-short ratio above 2.5 on Binance. When price reversed at $1.70 — a zone where previous multi-month selling pressure had accumulated — cascading liquidations drove the 37 percent intraday collapse.

Open interest fell 6.4 percent in two days. That is deleveraging, not new selling conviction. The positions being liquidated were speculative leveraged longs, not spot holders dumping XRP.

The distinction matters. A leverage flush that does not break the underlying demand structure can actually clear the overhang that caps the next leg up. But only if buyers step in below the flush.

The level that separates recovery from reversal

Three moving averages converge at $1.31 to $1.35: the 10-day SMA, the 10-day EMA, and the 200-day EMA. On a daily chart, that cluster sits above the $0.90 to $1.10 range where XRP spent most of the summer before the breakout. It also aligns with a zone where significant liquidation liquidity sits — meaning if price approaches it, stop-loss orders and forced liquidations could accelerate the move in either direction.

Hold $1.31–$1.35 and the rally structure remains intact. The three-month pattern of higher highs and higher lows ($1.32 to $1.53) stays alive. The path toward $1.54 — the recent three-month high and 50-week EMA — stays in play. A weekly close above $1.54 would confirm the death cross (the 50-day SMA crossing below the 200-day SMA, which formed earlier in August) has been negated.

Lose it and the setup breaks. A daily close below $1.31 reverses the post-rally structure, and the next meaningful support drops to $1.10 — the former resistance ceiling that broke in late August. That is a 20 percent decline from current levels. The buyers who entered between $1.40 and $1.70 would be trapped with no nearby defense.

The 200-day SMA itself sits at approximately $1.28, so a break below the $1.31–$1.35 cluster would also mean falling through one of the most widely watched trend line on the daily chart. That matters because it changes who is watching and who is acting.

The counter-pressure you can't ignore

The technical case for continuation faces two structural headwinds.

Escrow supply. Ripple releases approximately 1 billion XRP monthly from escrow. While the company typically re-locks 800 million, leaving 100–200 million in net new supply, ETFs absorb roughly 109 million per month. The escrow release is two to four times faster than ETF absorption. September's unlock is scheduled for September 1, and a $1.08 billion release at current prices sits over the market like a cloud. Historical re-locking behavior mitigates the overhang, but the timing pressure is real.

The ETF disconnect. Nine consecutive days of net ETF inflows have not prevented the spot price decline. Cumulative ETF holdings now represent roughly 1.50 percent of total XRP supply — meaningful, but not yet dominant. When institutional buyers absorb supply but the price still falls, it means profit-taking and derivatives pressure are currently overpowering the bid. That's not a thesis-killer, but it's a signal that demand hasn't yet caught up to the price.

The CLARITY Act clock. The Senate procedural vote on the CLARITY Act is scheduled for September 15. Prediction markets put the passing odds at roughly 16 percent. The legislation could unlock billions in institutional inflows if passed, or extend regulatory uncertainty for another cycle if it fails. That binary event is seven weeks away — long enough to matter, short enough to keep positioning tentative.

The decision map

Scenario	Condition	Path	Invalidation
Continuation	Hold above $1.35, reclaim $1.54	Test $1.70 prior high, then $1.80–$2.00 supply zone	Daily close below $1.31
Failure	Daily close below $1.31	Retest $1.10 former breakout level; $0.99 if that fails	Weekly close above $1.54

The horizon is two to four weeks. The September 1 escrow unlock and the September 15 Senate vote compress the decision window. A stock that resolves its technical setup between those two dates has a cleaner read than one that drifts into them unresolved.

Hold $1.35, the rally lives. Lose it, the trap closes.

XRP's daily RSI sits at 72.1 — still elevated but cooling from the 85 it hit at the peak. Historically, readings above 80 have preceded 15–18 percent retracements within two weeks, and XRP is roughly 17 percent below its high. That puts the pullback right on its historical pattern, not outside it.

The question is whether the correction ends here, at the moving-average cluster and the first meaningful post-flush support, or whether the escrow supply and ETF disconnect combine to push it lower.

Watch the $1.31–$1.35 zone over the next five trading days. A sustained hold with volume declining on dips — the hallmark of exhaustion selling — means the rally has absorbed the leverage flush and the next leg begins. A break below it on expanding volume means the rally was the event, and the buyers who chased above $1.40 are now the supply.