XRP prints bearish dragonfly doji as traders brace for US CLARITY Act
XRP’s recent price action is flashing a warning signal just as US lawmakers prepare to move forward with the CLARITY Act, a bill that could reshape how digital assets are regulated. Technical and macro factors are converging in a way that suggests XRP may be vulnerable to a deeper pullback in the near term.
At the time of writing, Ripple’s native token is trading around $2.0840, standing roughly 43% below its all‑time high. This weakness has unfolded alongside a broader correction across the crypto market, with risk assets selling off amid uncertainty over inflation, interest rates, and regulatory direction.
For now, XRP is clinging to a crucial psychological and technical support area near $2. A sustained break below this level, however, could open the door to an accelerated decline, especially given the pattern that has just formed on the weekly chart.
Dragonfly doji on the weekly chart: why it matters
On the weekly timeframe, XRP has printed a candlestick pattern widely recognized by technical analysts as a dragonfly doji. This formation typically appears after a strong move and signals a sharp internal struggle between buyers and sellers.
A dragonfly doji is marked by a very small real body and an extended shadow, showing that the price moved aggressively away from the open during the week but ultimately closed back near the opening level. In this context, the candle suggests that bulls attempted to defend higher levels but failed to maintain control, leaving the market vulnerable to a sentiment shift.
In many historical cases across different markets, such a candle at or near local peaks has been associated with trend exhaustion and the beginning of a downward phase. While no pattern guarantees future performance, the appearance of a dragonfly doji at current valuations reinforces the risk that XRP could see additional downside if sellers follow through.
Double-top structure reinforces downside risk
The weekly chart is not only signaling a doji-based reversal; it is also showing a broader pattern often linked with bearish outcomes: a double top. XRP has carved out two prominent peaks in the region of $3.3962, forming what technicians refer to as a double-top formation.
The corresponding neckline of this pattern lies near $1.6200, which also lines up with the lows seen in April of last year. This confluence elevates the importance of $1.6200 as a key structural support. A decisive move down toward that level after the recent hesitation candle would fit the textbook behavior of a completed double top.
Adding to this negative technical backdrop, XRP has slipped beneath both its 50-week and 100-week Weighted Moving Averages. Trading below these longer-term trend indicators usually signals that medium- and long-horizon buyers are losing conviction. It also means that rallies are more likely to be sold into until price can reclaim those moving averages.
Under these conditions, the most probable scenario from a purely chart-based perspective is a continuation of the decline toward the neckline around $1.6200. If that floor fails to hold, the chart implies scope for an extension of the sell-off toward the next major support zone around $1.50.
Macro backdrop: CPI and inflation in focus
The technical setup is forming against a sensitive macroeconomic backdrop. Market participants are closely watching upcoming US inflation data, which has repeatedly steered sentiment in both traditional and digital asset markets.
The Bureau of Labor Statistics is set to publish December Consumer Price Index figures. According to data collated by economic trackers, headline CPI was steady at 2.6% in December, while the core gauge — which excludes food and energy — edged down from 2.7% to 2.6%.
Despite the modest easing, investors remain cautious. A surprise uptick in inflation would likely revive expectations of higher-for-longer interest rates. Since tighter monetary policy tends to weigh on speculative assets, an upside surprise in CPI would be a clear bearish catalyst for cryptocurrencies such as XRP, potentially triggering a new wave of risk-off positioning.
On the other hand, there are early signs that inflationary pressures continue to moderate. Crude oil prices have retreated in recent months, and mortgage rates have come off their peak, both of which typically reduce cost pressures within the broader economy. If upcoming data confirms a steady or faster decline in inflation, it could ease pressure on risk assets and at least partially offset some of the bearish technical signals.
Regulatory spotlight: CLARITY Act as a pivotal catalyst
Overlaying the macro story is an equally important regulatory narrative. XRP traders are closely tracking the progress of the CLARITY Act, which is set for markup later this week. This legislative proposal aims to bring sharper definition to the rules governing digital assets by delineating the responsibilities of the Securities and Exchange Commission and the Commodity Futures Trading Commission.
In practice, the act seeks to answer one of the most contentious questions in US crypto regulation: which digital assets should be treated as securities and which as commodities. For XRP, a token that has long been at the center of regulatory debate, this clarification could be a watershed moment.
If the final contours of the bill lean toward a more supportive framework for tokens that function as payment or utility assets, market confidence in XRP could improve, potentially providing a counterweight to the current bearish chart factors. Conversely, if the resulting regime increases compliance burdens or introduces new uncertainties, it may deepen investor caution, reinforcing the downside technical patterns that are already in place.
In the short term, however, even potentially positive reforms can create volatility. Traders often derisk into major legal or regulatory events, preferring to re-enter positions only once the implications become clearer. That behavior alone could exacerbate any technical selling pressure in the weeks surrounding the CLARITY Act discussions.
Earnings season and risk appetite spillover
Another key element for XRP’s near-term trajectory is the broader risk environment shaped by corporate earnings. A new earnings season is kicking off, with heavyweight financial institutions such as Goldman Sachs, Bank of America, JPMorgan, and BlackRock set to report their results.
Stronger-than-expected numbers from these large banks and asset managers could support equity markets, improving overall risk sentiment. Historically, when stocks rally on the back of robust earnings, some of that renewed appetite for risk can spill over into cryptocurrencies, including XRP.
However, the relationship is not linear. If earnings reveal profit pressures, deteriorating credit quality, or cautious forward guidance, equity indices may come under strain. Under those conditions, digital assets — particularly those already flashing bearish technical patterns — can suffer amplified losses as investors retreat to safer assets.
For XRP, this means that even if its own fundamentals remain unchanged, broader market psychology shaped by earnings headlines could drive sharp swings in price around key technical levels.
Short-term scenarios for XRP traders and investors
Given this mix of technical and fundamental drivers, XRP market participants should consider a range of potential short‑term scenarios:
1. Bearish continuation toward $1.62
If sellers build on the dragonfly doji and broader risk sentiment deteriorates — due to higher CPI, weak earnings, or adverse regulatory headlines — XRP may lose its grip on the $2 area and drift toward the double-top neckline around $1.6200. This would be a natural target for bears and a key decision point for longer‑term holders.
2. Break of neckline and slide to $1.50
A clean breach and weekly close below $1.6200 would confirm the double-top pattern and strengthen the case for further downside. In that event, the next logical support region comes into play around $1.50, where buyers may attempt to stage a stronger defense.
3. Range-bound consolidation above $2
If macro data is neutral and regulatory developments proceed without dramatic surprises, XRP might oscillate between roughly $2 and $2.50 while the market digests incoming information. This scenario would reduce immediate crash risk but leave the bearish longer-term patterns intact unless price can reclaim key moving averages.
4. Bullish invalidation of the bearish setup
For the current negative technical picture to be truly challenged, XRP would need to rebound decisively, push back above the 50-week and 100-week WMAs, and form a higher high relative to recent peaks. While not impossible, this likely requires a combination of benign inflation data, supportive regulatory outcomes, and a strong recovery in risk assets.
Risk management considerations
For traders, the current environment underscores the importance of disciplined risk management. With a clear technical map — major resistance near the previous double-top region of $3.3962 and layered support levels around $2, $1.62, and $1.50 — position sizing and stop-loss placement become critical.
Short-term participants might look to use rallies into resistance and moving averages as opportunities to reduce risk or secure profits, particularly while the weekly structure remains bearish. Longer-term investors, by contrast, may view deeper drawdowns toward historical support as potential accumulation zones, but only if they are comfortable with elevated regulatory and macro uncertainty.
In both cases, ignoring the intersection between technical patterns and upcoming macro/regulatory events would be a mistake. The dragonfly doji, the loss of key moving averages, and the double-top neckline all suggest that volatility spikes are likely as each new data point on inflation, policy, and legislation arrives.
How the CLARITY Act could reshape XRP’s narrative
Beyond the immediate price implications, the CLARITY Act has the potential to redefine XRP’s longer-term story. At the heart of many valuation debates around the token is not just demand for cross-border payments or institutional adoption, but also the question of legal status.
A clearer division of oversight between the SEC and the CFTC could reduce the overhang that has discouraged some institutional players from engaging with certain digital assets. If XRP benefits from that clarity, it may attract new categories of investors who previously stayed on the sidelines due to compliance concerns.
On the flip side, if new rules narrow the ways certain tokens can be offered, traded, or held, liquidity could become more fragmented in the short term. That could amplify price swings, making technical levels even more significant as traders navigate changing market structure.
Medium-term outlook: balancing pessimism and potential
Looking beyond the coming weeks, XRP’s outlook will hinge on how these various forces resolve. The current weekly patterns lean bearish, implying that the path of least resistance is to the downside unless new bullish catalysts emerge. Yet markets are dynamic: negative technicals can be rapidly reversed if macro conditions soften, regulatory narratives turn constructive, or adoption metrics improve.
For now, the combination of a dragonfly doji on the weekly chart, a confirmed double-top structure with a neckline at $1.6200, and price trading below the 50- and 100-week WMAs sets a cautious tone. With crucial inflation data, a new earnings season, and the CLARITY Act all converging in the same window, XRP is entering a period where both risk and opportunity are elevated.
Traders and investors who remain engaged with the asset should be prepared for sharp moves in either direction, respect the key levels highlighted by the charts, and remain attentive to the policy signals coming out of Washington — all of which will help determine whether XRP’s next major move is a controlled correction or a deeper slide toward the $1.50 area.