XTZ's $1 Breakout Potential: Navigating Post-Liquidity Sweep Momentum and On-Chain Accumulation Signals

The Bearish Backdrop: Liquidity Sweeps and Structural Weakness

Tezos (XTZ) entered Q3 2025 under significant bearish pressure, with liquidity sweeps in early April 2025 driving a 17.20% weekly decline—the largest underperformance in the crypto market [1]. The price action broke below its post-election peak of $1.90, establishing a new support at $0.53 [1]. This collapse was exacerbated by weak dip-buying and a lack of accumulation at critical levels, signaling a fragile market structure. According to a report by Ambcrypto, XTZ’s bearish momentum remains intact, with no discernible bid-side absorption to counteract selling pressure [1].

On-Chain Accumulation: A Glimmer of Resilience

Despite the bearish backdrop, on-chain data reveals pockets of resilience. In July 2025, XTZ surged 55.5% amid regulatory progress and heightened whale activity, driven by DeFi staking inflows [4]. This rally, while short-lived, underscored growing institutional and retail interest in Tezos’s proof-of-stake (LPoS) model. Data from Webisoft highlights that DeFi staking platforms are becoming more accessible, enabling users to lock XTZ in liquidity pools for yield [3]. By August 2025, XTZ’s price had stabilized at $0.7745, with projections suggesting a 0.42% monthly growth rate to $0.8292 by September 2025 [1].

Institutional Staking: A Catalyst for the $1 Breakout?

Institutional-grade staking platforms like Kiln have emerged as key players in XTZ’s ecosystem. Kiln’s Q3 2025 expansion included features such as stablecoin yields and enterprise-grade validators, attracting institutional capital [2]. As of June 2025, Tezos’s staking ecosystem boasted 288 active validators and 167.8K delegators securing $566.55 million in total economic security [2]. These figures, combined with a 16.2% annualized reward rate for stakers, suggest a robust infrastructure capable of supporting higher XTZ prices.

The Quebec protocol upgrade and Data-Availability Layer (DAL) further bolstered Tezos’s appeal. The DAL reduced transaction failures and enhanced throughput, making the network more attractive for DeFi applications [6]. Analysts at HelloSafe note that these upgrades, alongside collaborations with U.S. legal entities like Sycamore Legal, position Tezos as a viable Layer 1 alternative to Ethereum [6].

Market Structure Shifts: From Bearish to Bullish Setup

The interplay between liquidity sweeps and on-chain accumulation creates a nuanced picture. While XTZ’s short-term technical indicators remain bearish—overbought RSI readings and resistance at $1.06—longer-term fundamentals are improving [6]. The projected 5% annual growth rate to $0.8447 by year-end 2025 [1] aligns with a gradual accumulation phase, where institutional inflows and DeFi adoption could drive a breakout above $1.00.

However, risks persist. The broader DeFi market faces challenges like liquidation patterns and overcollateralization requirements [5], which could dampen XTZ’s momentum. Additionally, the absence of strong dip-buying in Q3 2025 suggests that retail investors remain cautious [1].

Conclusion: A Calculated Bet on XTZ’s $1 Threshold

XTZ’s path to $1 hinges on three factors:
1. Sustained on-chain accumulation through DeFi staking and institutional inflows.
2. Regulatory clarity to attract institutional capital, particularly in the U.S. and EU.
3. Protocol upgrades that enhance scalability and reduce transaction costs.

While the bearish momentum from Q1 2025 lingers, the growing institutional interest and technical improvements in Tezos’s ecosystem suggest a potential inflection point. If staking inflows continue to outpace selling pressure, XTZ could test the $1.00 level by late 2025—a scenario that would validate its role as a key player in the post-liquidity sweep altseason rally.

Source:
[1] Crypto market's weekly winners and losers – XCN, [https://ambcrypto.com/crypto-market-weekly-review-13-april/]
[2] Kiln Blog: Enterprise-grade staking solutions [https://www.kiln.fi/blog]
[3] DeFi Staking Platforms 2025: How It Works & Risks, [https://webisoft.com/articles/defi-staking/]
[4] Weekly Rollup - July 22, 2025, [https://calebandbrown.com/blog/weekly-rollup-july-22-2025/]
[5] Latest Compound (COMP) News Update, [https://coinmarketcap.com/cmc-ai/compound/latest-updates/]
[6] Should You Buy Tezos in 2025? [https://hellosafe.ph/investing/crypto/coins/tezos]