XRP bears trap sparks whales into action as reversal gains momentum

A dramatic XRP bears trap is unfolding as the cryptocurrency’s swift rebound from $2.29 shocks traders who bet on further declines. Bears appeared to be in control after a steep drop from $2.44, only for XRP to reverse sharply, liquidating over-leveraged short positions and reigniting bullish momentum.

This dramatic price action has sparked new optimism that XRP could lead the next major altcoin rally. In fact, the XRP bears trap is quickly fading as trading metrics reveal that the panic sell-off is losing steam.

According to CoinMarketCap, XRP’s trading volume has surged over 3%, hitting $3.46 billion. That uptick reflects not just a reaction to volatility but also a strong influx of buyers absorbing sell orders—a clear sign of renewed market strength.

XRP bears trap easing and what the volume surge tells us

The cryptocurrency market witnessed a textbook XRP bear trap this week as the crypto staged an impressive recovery, catching pessimistic traders off guard. After tumbling from $2.44 to $2.29 – a drop that had many declaring the rally over – the digital asset suddenly reversed course in a move that analysts are calling one of the most dramatic squeeze plays of the quarter.

Market strategist Lena Petrova observed,

“This was a classic case of the market punishing overconfident bears. The moment XRP dipped below $2.30, we saw a flood of short positions open up. But the bounce came so fast that many traders didn’t have time to react.”

The reversal was anything but random. Blockchain data reveals that while retail traders were panic-selling, institutional-sized wallets were quietly accumulating. This divergence between retail sentiment and smart money activity created the perfect conditions for what market veterans call a “bear trap” – when prices appear to confirm a downward trend only to sharply reverse.

Key developments in the XRP market:

• $15 million in short positions liquidated within 4 hours

• Trading volume spiked 240% during the reversal

• Large wallet holdings increased by 3.2% during the dip

XRP bears trap and historical trends

Data from the past five years reveals an intriguing pattern: May has consistently been one of XRP’s strongest months, with average returns of 18% since 2020. This seasonal tendency, combined with the current market dynamics, has analysts watching the $3.00 level as a realistic near-term target.

“XRP tends to find its rhythm in May,” explains David Thompson, chief analyst at CryptoPatterns. “When you combine this seasonal tendency with the recent short squeeze we’ve witnessed, the conditions are ripe for significant upward movement.”

The mechanics of the current bear trap reveal why this setup is particularly potent:

1. Mass Liquidation Events: Over $28 million in XRP short positions were liquidated during the rebound

2. Stop-Loss Domino Effect: Cascading stop orders below $2.30 created a vacuum of selling pressure

3. Whale Accumulation: Large investors used the dip to accumulate, with wallets holding 1M+ XRP adding 4.2% to their positions

Market intelligence platform Santiment observed: “What makes this recovery remarkable is how it’s playing against typical trader psychology. The majority were positioned for further downside, creating the perfect conditions for a powerful reversal

Whale accumulation adds to bullish sentiment

There’s growing speculation that large XRP holders, often dubbed “whales,” are behind the sudden bounce. Blockchain data shows increasing wallet activity among holders with over 10 million XRP, which supports the rebound theory.

“Whales are known to buy heavily into dips to prepare for medium-term rallies,” said James Butterfill, head of research at CoinShares.

As the XRP bears trap fades, all eyes are on whether XRP can cement its bullish momentum and inspire wider confidence across altcoins.

The volume rebound, historical trends, whale behavior, and bullish chart patterns all align toward one direction: up.

For now, XRP appears to be leading the charge into what could be a renewed altcoin rally. The Bit Gazette will continue to observe the market and report as events unfold.