XRP Rallies 30% to Near $1.32 Amid Bitcoin’s Record Short Squeeze
XRP surged roughly 30% this week following Bitcoin's breakthrough above $72,000, driven by a record liquidation cascade triggered by U.S. Treasury stimulus signals, though weakening capital inflows suggest the move may lack conviction.
Bitcoin’s Short Squeeze Catalyzes Altcoin Rally
Bitcoin’s weekly climb to $72,000 represents its highest price since a flash crash in June, with the breakthrough driven by a significant policy signal from the U.S. Treasury. The government announced plans to double long-bond buyback operations to at least $4 billion per transaction beginning September 9—a stimulus measure that immediately spooked bearish traders. The announcement triggered over $3 billion in liquidated short positions within a single 24-hour window, marking one of the largest liquidation events on record and creating powerful momentum that rippled across the broader crypto market.
The event unfolded amid heightened industry engagement with the incoming administration. Trump participated in meetings with cryptocurrency executives representing Ripple, Coinbase, and Robinhood at the White House, underscoring crypto’s growing relevance in policy circles. For XRP specifically, the timing proved significant. The token had bottomed at approximately $0.9862 the previous week—the exact level it occupied just before November 2024’s post-election surge that carried it toward an all-time high near $3.65.
Impressive Gains Mask Shallow Foundation
XRP’s recovery was striking. On Wednesday alone, the token surged 10.40%, marking its sharpest single-day move since February 6. Thursday brought a second leg higher, pushing the weekly high toward $1.32 and bringing the token closest to its 200-day moving average since early 2026. From weekend lows below $1, the week’s climb represented a 30% rebound in just seven days—the kind of performance that typically generates considerable excitement.
Yet technical indicators reveal a more complicated story beneath the surface price action. XRP’s Relative Strength Index spiked to 79.2, signaling deeply overbought conditions where reversals have historically occurred. The Average Directional Index scored above 29, confirming that trend strength had increased, but the capital flows underpinning the move painted an entirely different narrative.
Capital Flows Suggest Temporary Rally
XRP exchange-traded fund inflows collapsed from $5.81 million to just $2.35 million during the rally’s peak, even as the token substantially outpaced Bitcoin’s percentage gains. Bitcoin ETFs, by contrast, attracted $517 million in the same period—their largest single-day inflow since May. This divergence between price strength and institutional capital flow signals caution, suggesting retail enthusiasm rather than broad institutional conviction.
Futures open interest in XRP has already contracted more than 11% from the rally’s high, indicating that traders who positioned for sustained breakout are taking profits. The token still trades approximately 17.5% below its 200-day moving average, meaning the longer-term downtrend remains firmly entrenched. XRP’s surge exemplifies how macroeconomic policy and Bitcoin momentum can rapidly drive gains across the crypto market, yet the absence of sustained institutional capital inflows suggests this week’s gains may ultimately prove temporary.
Source: U.S. Treasury, via Decrypt. Not financial advice.