- XRP faces doubts over a Japan-driven rally as analysts point to slow Bank of Japan tightening and stronger stablecoin liquidity.
- XRP still sees institutional buying during dips, with ETF inflows supporting key support around $1.20–$1.22.
Renewed speculation around Japan’s monetary policy has sparked optimism among XRP supporters, with some suggesting that changes in the Japanese yen carry trade could trigger a strong price rally. However, not everyone in the XRP community agrees with that outlook.
An XRP commentator known as Eri has pushed back against the idea that Japan’s policy shifts will lead to an immediate surge in price. She argues that the narrative is moving ahead of actual market conditions.
Gradual BOJ tightening reduces shock risk
Eri’s first point is that the Bank of Japan has been tightening policy at a very slow pace. Interest rates have moved from about -0.1% in 2023 to roughly 0.75% by the end of 2025.
This gradual increase, she notes, has given institutions and leveraged traders enough time to adjust positions. As a result, there is less risk of a sudden unwind in the yen carry trade that could disrupt global markets.
Major stress event is still seen as far away
Her second argument is that conditions for a serious carry trade shock are still not in place. Eri believes a more meaningful disruption is unlikely until Japanese rates approach 1.5%.
She estimates that this level could still be 18 to 24 months away. Until then, she expects markets to remain relatively stable, limiting any immediate macro-driven boost for XRP.
Liquidity gap limits XRP’s role in global flows
The third concern raised is XRP’s liquidity compared to stablecoins. Eri referenced XRPL Foundation leader Brett Mollin, noting that stablecoins like USDT and USDC continue to dominate global settlement activity.
According to this view, deeper liquidity in stablecoin markets makes them more attractive for large-scale transactions. This reduces XRP’s role as a preferred bridge asset in current market conditions.
Taken together, Eri concludes that expectations of a Japan-driven XRP price explosion may be overstated, even though she remains positive about XRP’s long-term prospects.
Institutions step in during XRP selloff
Despite doubts around the Japan narrative, recent market data shows continued institutional interest in XRP.
The token recently faced a sharp selloff after a large liquidation event wiped out leveraged long positions at a 16-to-1 imbalance. This pushed XRP below $1.25 before dropping toward $1.22 as automated liquidations accelerated the move.
While retail traders exited positions in panic, institutional investors appeared to accumulate. U.S. spot XRP ETFs recorded $4.13 million in inflows on the same day, even as Bitcoin ETFs saw over $519 million in outflows.
Key XRP levels to watch next
XRP is now trading near a critical support zone between $1.20 and $1.22. If buying pressure continues from institutions, the price could stabilize and recover toward $1.38.
However, if broader market weakness persists, XRP could slide toward the $1.00 level. The lower Bollinger Band near $0.95 is also seen as a potential downside target if selling pressure intensifies.
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