Institutional Demand for XRP Grows Amidst Price Decline

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A curious divergence is unfolding in the XRP market as the year draws to a close. While the digital asset's price has broken below a key technical level, institutional investment vehicles are simultaneously recording unprecedented inflows. This dynamic highlights a stark contrast between long-term strategic positioning and short-term trader sentiment.

Despite weakening spot prices, financial products tracking XRP are attracting significant capital. Data from CoinShares reveals that XRP exchange-traded products (ETPs) saw inflows of $70.2 million in the final week of December alone. For the entire month, the figure surpassed $424 million. Since the launch of US-listed XRP investment products in mid-October, cumulative inflows have exceeded $1 billion.

This trend underscores a fundamental institutional approach. Family offices, multi-asset funds, and wealth managers often operate under rigid allocation models. Once an investment is approved, capital deployment frequently proceeds independently of short-term price volatility. This explains the sustained institutional buying pressure even as retail traders exit their positions.

Technical Structure Under Pressure

On the charts, XRP faced a significant setback by falling below the crucial $1.87 support level. This breakdown was accompanied by a substantial surge in trading volume, indicating genuine selling pressure rather than a minor fluctuation. Approximately 68 million XRP changed hands during the move—a figure roughly 77% above the daily average. Overall 24-hour trading volume jumped 65% to $1.76 billion.

Although a double-bottom pattern formed near $1.85 on the daily chart, every subsequent recovery attempt has been capped at that former support level, which now acts as resistance. Should the price fail to hold the zone around $1.84, the next focal point for market observers becomes the $1.77 to $1.80 range, a historical area of buyer intervention.

On-Chain Data Points to Profit-Taking

Blockchain analytics present a clear narrative of distribution. Since mid-December, daily inflows of between 35 million and 116 million XRP have been recorded moving onto major exchanges, with Binance being a primary destination. Such movements typically signal an intent to sell, whether for profit-taking or defensive portfolio rebalancing.

Concurrently, wallet distribution data reveals extreme concentration. Over six million addresses hold less than 500 XRP each. Meanwhile, so-called "whale" wallets containing more than 100 million tokens now control over 48 billion XRP—a seven-year high. For smaller investors, entry costs have risen considerably; 1,000 XRP now cost approximately $1,750, compared to around $500 a year ago.

Outlook: A Market at a Crossroads

The XRP market is currently caught between two opposing forces. Institutional players are methodically building exposure through regulated products, while short-term traders are liquidating holdings. The technical picture remains fragile, and market sentiment is predominantly negative. A failure of the $1.80 support could invite further downward pressure.

However, the consistent billion-dollar inflows into ETPs are establishing a substantial foundation of institutional demand that is expected to influence the market eventually. Additional product launches scheduled for January in Japan will serve as a key test, indicating whether this fundamental demand will ultimately be reflected in the spot price.