Ripple CEO Backs Flawed CLARITY Act as XRP Faces Bearish Invalidation at $1.85

VADODARA, January 16, 2026 — Ripple CEO Brad Garlinghouse has endorsed the controversial CLARITY Act, arguing that imperfect regulatory clarity trumps current market chaos, according to a report from CryptoBasic. This daily crypto analysis examines the contradictory signals within the U.S. crypto industry, where Ripple's support clashes with Coinbase's withdrawal, creating a regulatory Fair Value Gap (FVG) that could destabilize XRP's price structure. Market structure suggests this legislative battle represents a critical Order Block for institutional adoption, with XRP currently trading at $2.04, down 2.17% in 24 hours.

Market Context & Background

The CLARITY Act emerges during a period of heightened regulatory scrutiny, mirroring the SEC's aggressive stance post-2023. Historical cycles suggest that regulatory uncertainty typically precedes liquidity grabs in major assets like Bitcoin and Ethereum. According to on-chain data, the current environment resembles the 2021-2022 period when conflicting signals from the CFTC and SEC led to prolonged consolidation. The bill's focus on tokenized securities and DeFi access directly impacts XRP, given its ongoing legal battles. Related developments include recent shifts in market sentiment, as seen in the Crypto Fear & Greed Index dropping to neutral levels, and broader market movements where U.S. stock gains have masked Bitcoin's liquidity dynamics.

What Happened?

On January 16, 2026, Ripple CEO Brad Garlinghouse publicly supported the CLARITY Act, stating that clarity is better than chaos, per CryptoBasic. He urged industry engagement to refine the bill rather than reject it outright. However, Coinbase has withdrawn support, citing concerns including a de facto ban on tokenized securities, potential DeFi restrictions, weakened CFTC authority relative to the SEC, and prohibitions on stablecoin reward features. This divergence creates a regulatory schism, with Ripple advocating for incremental progress while Coinbase demands more favorable terms. The official SEC.gov framework for digital assets remains unchanged, adding to the complexity.

Technical Analysis & Price Action

XRP's price action shows a bearish bias, with the current price at $2.04 representing a 2.17% decline. Volume Profile indicates weak accumulation near this level, suggesting a lack of conviction. The Relative Strength Index (RSI) sits at 45, hovering near oversold territory but not yet signaling a reversal. Critical support is established at the $1.85 level, which aligns with the 200-day moving average and a previous liquidity pool. Resistance is noted at $2.20, where sell-side liquidity clusters. Bullish Invalidation is set at $1.85; a break below invalidates any near-term upside and targets the next support at $1.60. Bearish Invalidation is at $2.20; a close above this level would negate the current downtrend and open a path to $2.50.

By The Numbers

Why It Matters

This regulatory divide has asymmetric implications. For institutions, the CLARITY Act could provide a framework for compliance, potentially easing entry barriers. However, the Coinbase opposition highlights risks of overreach, such as stifling innovation in tokenized securities and DeFi. For retail, unclear rules may lead to increased volatility, as seen in XRP's recent price action. The bill's impact on stablecoin features could also affect broader adoption trends, similar to patterns observed in crypto card spending growth. Market structure suggests that regulatory clarity, even if flawed, reduces systemic risk but may compress margins for agile projects.

Community Sentiment

Industry sentiment is fractured. Bulls argue that any legislative progress reduces uncertainty, citing Garlinghouse's stance. Bears point to Coinbase's withdrawal as a red flag, warning of restrictive provisions. On-chain data indicates no significant whale accumulation in XRP, reflecting caution. Analysts on X/Twitter highlight the contradiction: "Supporting a flawed bill may backfire if it entrenches unfavorable terms," while others note, "Chaos hurts adoption more than imperfect rules." This split mirrors broader market neutrality, where indecision prevails amid conflicting signals.

Price Prediction / Future Outlook

Bullish Case: If the CLARITY Act passes with compromises, regulatory certainty could drive institutional inflows into XRP. A breakout above $2.20 would target $2.50, supported by positive on-chain metrics and increased DeFi integration. Historical patterns indicate that clear rules often precede multi-month rallies in established assets.

Bearish Case: If legislative gridlock persists or the bill fails, uncertainty may trigger a sell-off. A break below $1.85 could lead to a decline toward $1.60, exacerbated by weak volume and negative sentiment. The prohibition of stablecoin rewards might further dampen utility, pressuring prices.