XRP Seeing Similar Liquidity Structure to XLM Amid 40%+ Surge

Chart data shows XRP currently displaying a similar liquidity structure to Stellar amid the latter’s recent massive price surge.

Following the DTCC’s announcement that it had selected the Stellar blockchain for its securities tokenization project, Stellar (XLM) jumped more than 40%, reaching $0.29 before pulling back to around $0.25 at the time of writing.

This surge has brought attention to XRP due to its price correlation with XLM. Crypto analyst CryptoInsightUK believes XRP could be preparing for a similar breakout, arguing that the asset now shows many of the same signs that appeared before XLM’s recent rally. 

Key Points

• XLM jumped more than 40% after DTCC chose Stellar for its securities tokenization initiative.
• CryptoInsightUK says XRP is now seeing a similar liquidity structure to XLM following its surge.
• The XLM price broke out of its trading range before XRP during a similar setup in November.
• The analyst argues that large short positions above XRP could fuel a strong rally through a short squeeze.
• Based on liquidity analysis, CryptoInsightUK believes XRP could revisit $3.60 and potentially reach $4.20-$4.30.

XLM Typically Moves Before XRP

In a recent video analysis, CryptoInsightUK noted that while XRP and XLM tend to move alongside each other, XLM typically makes the first move before XRP follows.

To prove this, he called attention to the November 2024 rally, noting that XLM appeared to break out of its trading range before XRP did. According to him, on Nov. 11, 2024, XRP had not yet moved decisively above its local range high of about $0.63, even though it was beginning to test key resistance levels.

On the other hand, XLM managed to break above its range high area roughly one or two days earlier. While XRP continued to move sideways around Nov. 11 and 12, XLM had already started showing strength. According to the analyst, XRP did not begin its more meaningful upward move until around Nov. 16 or 17.

He also pointed out that XRP did not fully break through a resistance level that had held it back for months until roughly Nov. 28. Although XLM never reached new all-time highs during that period, he believes the comparison is still useful because XLM clearly broke out of its local range before XRP did.

Why the XRP-XLM Relationship Matters

According to CryptoInsightUK, the two assets tend to move closely together when their charts are compared. However, he observed that XLM usually stays slightly ahead of XRP and often starts moving first.

For that reason, he believes traders should pay attention to XLM’s latest rally. While he noted that he is not predicting that XRP will surge within the next day or two, he thinks XLM’s move could be an early signal that XRP is getting ready for a breakout of its own.

The analyst said he is encouraged by XLM’s continued strength because positive momentum in one major blockchain project can often lift interest across the wider market. 

Liquidity Levels Suggest More Room to Run

CryptoInsightUK then analyzed XRP’s and XLM’s liquidity data. He explained that XRP has spent a long time moving within a narrow range while large amounts of liquidity have built up above the current price.

He acknowledged that some liquidity still exists below the market and that XRP could potentially fall toward $1.22. However, he believes the larger opportunity lies above current levels. He highlighted liquidity clusters around $1.70 and $1.80, saying that if XRP reaches those areas, the move could become much stronger.

The analyst then compared XRP’s liquidity chart with XLM’s. Before its recent rally, XLM also had a large amount of liquidity sitting above the price. Although both assets had liquidity below them, he said the overall structure looked very similar.

One difference was that XLM did not have major liquidity levels until around $0.40, while XRP has liquidity spread across much higher price zones. Considering past market behavior, he believes assets often accelerate once they move into these heavily populated liquidity areas.

A Short Squeeze Could Add Fuel to the XRP Rally

CryptoInsightUK also argued that much of the liquidity above XRP comes from traders holding short positions. If price moves higher, those traders may be forced to close their positions, which requires buying XRP and can push the market even higher.

Although he noted a liquidity gap between $1.90 and $2.40, he stressed that XRP still has much more liquidity above it than XLM did before its breakout. If a strong catalyst appears, he believes XRP could move through these levels quickly.

Essentially, he suggested XRP could eventually return to at least $3.60. Speaking further, he also said that if a certain reading on his chart is not caused by an API error, XRP could potentially reach between $4.20 and $4.30.