XRP's recent price action is under scrutiny as profit-taking by long-term holders intensifies, raising concerns about its ability to sustain a recovery toward the $3 mark. Data indicates a surge in profit realization, with early XRP investors cashing out at an accelerated pace, a trend that deviates from historical patterns. This selling pressure, coupled with XRP's struggle to consistently stay above $2.30, has sparked debate about the token's short-term outlook.

Profit-Taking Signals Weakness

According to data from Glassnode, profit-realization activity among long-term XRP holders has increased by 240% since September, reaching approximately $220 million per day. This surge in selling is occurring as XRP's price has retreated from its September high of $3.09 to around $2.30. This trend marks a departure from previous cycles, where profit-taking typically coincided with price rallies. The current behavior suggests that long-term investors are selling into weakness to preserve capital, signaling a potential lack of confidence in XRP's immediate upside.

Technical Analysis and Market Sentiment

XRP is currently trading around $2.30, caught between bullish optimism and persistent selling pressure. While the token has shown resilience in maintaining critical support levels, it has struggled to overcome resistance at $2.40. A daily close above $2.60 could signal a potential breakout, shifting the market structure in favor of buyers and paving the way for a move towards the $2.80-$3.10 range. However, failure to break this level could lead to further rejection, potentially triggering a retest of the $2.20-$2.30 support zone.

Technical indicators present a mixed picture. The Relative Strength Index (RSI) suggests a buying opportunity. However, some analysts warn that failure to stay above the 200-week Simple Moving Average (SMA) could lead to significant declines, potentially mirroring past corrections.

Factors Influencing XRP's Trajectory

Several factors are expected to influence XRP's price trajectory in the coming months:

• ETF Speculation: The anticipation of a potential XRP ETF has generated considerable excitement in the market. Several companies have updated their filings with the U.S. SEC, paving the way for a potential ETF launch. However, the recent profit-taking activity suggests that some investors may be employing a "buy-the-rumor, sell-the-news" strategy, anticipating a price correction following the actual ETF launch.
• Ripple's Fundamentals: Despite the current selling pressure, XRP's fundamentals remain strong. Ripple's legal victory against the SEC has provided regulatory clarity, which could attract more institutional investors. The company's recent $500 million funding round and ongoing acquisitions further underscore its financial strength and commitment to expanding its ecosystem.
• Market Dynamics: The broader cryptocurrency market is also playing a role in XRP's price action. Bitcoin's recent struggles have weighed on the entire market, including XRP. However, positive developments, such as increased institutional staking and Bitcoin ETF inflows, could provide a boost to XRP and other altcoins.

Future Outlook

The short-term outlook for XRP remains uncertain. The increased profit-taking activity suggests that the token may face headwinds in its attempt to reach $3. However, strong fundamentals, potential ETF approval, and positive market developments could provide the necessary catalyst for a sustained recovery.

AI-driven models predict that XRP could cross $5 by Q2 2026, citing a limited circulating supply and growing institutional partnerships. However, these projections are contingent on XRP overcoming its current challenges and maintaining its momentum. One analyst suggests that XRP could enter the final phase of a historical four-phase trend soon, potentially pushing its price to $10. Another analyst suggests that if a fifth wave unfolds as projected, XRP could reach double-digit prices.

Traders are closely monitoring the $2.20 to $2.30 support band, as holding this level is crucial for maintaining a constructive outlook. A daily close above $2.35 could invite a push towards $2.54 to $2.80, and potentially $2.90 to $3.05 if ETF optimism accelerates.