XRP has recently been showing signs of a shifting market dynamic, with both aggressive sell-offs and increased buy orders. This combination of whale activity and retail investor participation signals that XRP could be on the brink of either a breakout or a correction, with the key resistance level set at $3.20. Breaking this threshold could set the stage for further gains, while failure to do so may see XRP test lower supports.

Whale Activity and Retail Investor Interest

Over the past few months, XRP has experienced notable volatility, driven by a mix of large sell orders and a growing number of retail buy orders. The aggressive sell-offs, likely driven by whales (large investors or holders), indicate that major players may be capitalizing on profits, particularly from price levels around $0.30. On the other hand, the increased buy orders from retail investors suggest a strong belief in the potential for growth, providing upward pressure on XRP’s price.

This dual action could create significant short-term price swings. While whales might push the price lower with large sell orders, retail buyers could provide enough support to keep the price from falling too drastically. If the trend continues, XRP might experience a more evenly distributed holding pattern, which could stabilize its price over time.

However, the continued dominance of whale transactions could lead to erratic price movements, deterring some retail investors due to perceived risks. These sharp price fluctuations have the potential to create both opportunities and challenges for XRP in the short term.

XRP Price Action: The Battle for $3.20

Recent analysis of XRP’s price action has shown a period of compressed volatility, hitting an 18-day low. This pattern is often a precursor to greater price movements, and many analysts are watching closely for any potential breakout. For XRP, the critical resistance level is $3.20, which aligns with its all-time high (ATH) Volume Weighted Average Price (VWAP) and the weekly VWAP.

If XRP can close decisively above $3.20, it could trigger a bullish breakout, leading to a surge toward higher resistance levels. This movement would indicate a positive shift in market sentiment, with the possibility of testing previous highs.

However, if XRP fails to break this resistance, it could solidify $2.90 as a key support zone. This level has consistently acted as a floor for XRP during recent pullbacks, offering a strong base for rebounds.

Support Levels and Potential Downturn

Should XRP struggle to maintain support above $2.90, further downward pressure could push the price toward lower support levels, including the $2.60 range. This area coincides with previous consolidations and the 1-month VWAP, making it a crucial point to watch. A sustained drop below this level would signal further weakness, potentially triggering a more significant correction in the near future.

The intersection of the $3.20 VWAP resistance and the current price action suggests that XRP is at a pivotal moment. Whether it can flip this resistance will likely determine its short-term trajectory. If successful, the path to higher highs may be open, but a failure could result in a retreat to lower supports.

U.S. Tax Waiver: A Boost for XRP?

In a major development for U.S.-based cryptocurrencies, Eric Trump recently confirmed that U.S.-domiciled crypto projects will benefit from a zero capital gains tax. Meanwhile, non-U.S. based crypto projects will be subject to a 30% tax rate. This policy is designed to encourage investment in domestic crypto ventures, and it could provide a significant boost to XRP, given its status as a U.S.-based cryptocurrency.

For U.S. investors, the tax exemption could make XRP a more attractive asset, potentially increasing demand and contributing to a rise in its market value. This favorable tax policy could encourage more retail and institutional investors to consider XRP as part of their portfolios, particularly if they are looking for tax-efficient investment opportunities in the cryptocurrency space.

The Bigger Picture: Risks and Considerations

While the U.S. tax policy could provide a favorable environment for XRP, it is important for investors to keep in mind that cryptocurrency markets are highly volatile and influenced by many factors. Regulatory changes, market sentiment, and technological advancements all play a role in shaping the future of digital assets.

Though the tax exemption could stimulate interest in XRP, investors should remain cautious. Thorough research and a careful understanding of the market’s dynamics are crucial before making any investment decisions. XRP’s price could be impacted by multiple variables, and while the tax policy may provide a short-term advantage, it is not the only factor that will determine XRP’s long-term success.

Conclusion: What’s Next for XRP?

XRP is facing a critical crossroads in its price action. With key resistance at $3.20 and support holding steady at $2.90, the next few weeks will be pivotal for the asset. The dynamics of whale sell-offs and retail buying are creating volatility, but the potential for a breakout remains high if the $3.20 level is flipped.

Additionally, the recent U.S. tax policy change could provide a boost to XRP, particularly for domestic investors looking to benefit from zero capital gains tax. However, investors must remain mindful of broader market factors and approach XRP’s prospects with careful consideration.

As XRP navigates this critical juncture, all eyes will be on its ability to break through $3.20 and maintain support above $2.90. Whether it can do so will determine the next phase of its market journey.