XRP (CRYPTO: XRP) has been trading sideways for a month, but traders say growing liquidity and fresh technical buy signals could set the token up for a sharp upside move.

Traders See Short Squeeze Setup Building

Analyst Cryptoinsightuk said XRP may be approaching a major local bottom as momentum indicators including RSI and MACD begin flashing historically bullish reversal signals.

The trader argued that deeply negative funding rates combined with heavy liquidity sitting above current price levels could fuel a strong short squeeze higher.

He compared XRP's current structure to the setup seen before Toncoin (CRYPTO: TON) broke out earlier this cycle.

According to the analyst, XRP could initially rally toward the $1.70-$1.90 range, while longer-term Elliott Wave projections point to potential upside targets between $8 and $12.

Network Activity Weakens Despite Bullish Signals

On-chain activity from Glassnode shows that it has slowed sharply since XRP's late-2024 rally. New XRP wallet creation has dropped from roughly 18,000 daily addresses in December 2024 to around 2,700 per day now, marking an 85% decline.

Monthly active XRP supply has also fallen from roughly 7.45 billion XRP daily to around 2 billion XRP over the same period.

The slowdown suggests speculative activity that previously drove XRP's breakout has cooled significantly.

Fresh Buy Signal

Crypto analyst Ali Martinez said XRP recently flashed a new TD Sequential buy signal on the 4-hour chart.

The latest signal suggests XRP's short-term pullback may be ending.

Martinez noted the same indicator correctly identified the recent local top near $1.46, which was followed by a roughly 5.5% correction.

The analyst is watching for a rebound toward the $1.45 resistance zone first. If XRP clears overhead supply, he sees a potential extension toward $1.80.

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