XRP's Hidden Bull Signal: Why This Bear Trap Could Reshape 2026

Market observers are increasingly viewing XRP’s recent price struggles through a different lens. Rather than a simple downtrend, technical analysts argue that XRP may be setting up one of its most significant bear traps on record—a dynamic that could trigger substantial upside once investors recognize the shift.

Understanding the Bear Trap Pattern

When a bear trap unfolds, it presents a false breakdown. Traders interpret weakening price action as the start of a serious decline, prompting them to take short positions and build defensive stakes. This selling wave creates liquidity that eventually exhausts itself. Once the bears’ ammunition runs dry, the price reverses sharply upward, forcing short sellers to cover at losses.

These traps thrive in markets showing underlying strength or transition phases. They emerge near established support zones and feed on emotion rather than fundamental weakness. A textbook example occurred in July when XRP briefly broke below $3 after reaching $3.65, convincing many holders to exit. The recovery came swiftly as weaker hands capitulated, allowing the asset to reclaim lost ground.

The Pattern Repeats

ChartNerd, a respected technical analyst, observed that XRP’s current market structure mirrors this exact dynamic. The asset has tested downside levels repeatedly throughout December without achieving sustained breakdown. Each dip attracts fresh buying interest faster than expected, leading to rapid recoveries. This pattern of flash declines followed by quick rebounds contradicts the bearish narrative and points toward accumulation rather than capitulation.

What’s Next for XRP

As 2026 unfolds, market structure suggests XRP stands at an inflection point. High volatility in recent weeks has ultimately resolved with price dips being absorbed. Should the bear trap thesis prove correct, the next phase typically involves explosive repricing. Short sellers scrambling to cover positions while dormant capital re-enters the market can generate substantial momentum that catches many participants off-guard.

Industry participants maintain elevated expectations for XRP heading into the new year. A confirmed break above resistance levels could validate the bear trap scenario and unlock a powerful rally phase. The setup appears primed for a significant move, though traders should monitor key technical levels closely for confirmation of the reversal pattern.