Institutional Demand Fuels XRP’s Sustained Rally

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XRP has kicked off 2026 with significant momentum, marking its fifth consecutive trading day in the green and pushing its price above the $2.12 threshold. This performance stands in stark contrast to major peers Bitcoin and Ethereum, which saw capital outflows over the holiday period. Notably, XRP-focused exchange-traded funds (ETFs) attracted $483 million in December alone, highlighting a distinct divergence in institutional sentiment. Concurrently, the amount of XRP held on centralized exchanges has plummeted to an eight-year low.

A tightening supply picture is emerging for XRP. Holdings on major trading platforms have dwindled to approximately 1.6 billion tokens. This represents a dramatic 57% decline since October 2025 and the lowest level recorded since 2018. Such a reduction in readily available tokens typically leads to thinner order books, which can amplify price movements when met with sustained buying pressure.

This supply squeeze coincides with a notable resurgence in usage of the XRP Ledger. Daily transaction counts are approaching one million, reaching a five-month peak. Furthermore, the total payment volume processed on the network has surged by 140% since the middle of 2025.

ETF Inflows Shatter Projections

The structural demand driving this dynamic is largely institutional. Spot XRP ETFs, which launched in November 2025, have exceeded all expectations. They crossed the $1.3 billion mark in cumulative inflows within just 50 days of trading. This milestone makes XRP the second-fastest cryptocurrency to achieve such a feat, trailing only Bitcoin.

Major asset managers including Canary Capital, Franklin Templeton, Bitwise, and Grayscale are behind these products, providing access for pension funds, endowments, and other institutional investors. The collective assets under management for these ETFs now stand at $1.37 billion, representing ownership of roughly 760 million XRP tokens.

December's $483 million inflow is particularly telling when compared to the outflows seen in other crypto ETF products. Bitcoin ETFs witnessed $1.09 billion in withdrawals during the same period, while Ethereum products saw outflows of $564 million.

Technical Breakout Gains Momentum

From a chart perspective, XRP has decisively broken out above a descending channel that had contained its price action since July 2025. The breakout on January 5 was accompanied by substantial volume, which registered about 48% above the seven-day average—a sign of broad-based participation.

The price is currently consolidating in a short-term range between $2.128 and $2.152. Maintaining a foothold above $2.13 could pave the way for a test of the $2.20 resistance level. Conversely, a drop back below $2.10 might trigger a corrective move toward the $1.85 support zone.

Ecosystem and Regulatory Tailwinds

Supporting fundamentals continue to strengthen. Ripple is advancing its ecosystem, with plans to launch its dollar-pegged stablecoin, RLUSD, in Japan during the first quarter of 2026. This move could generate additional demand for XRP in its role as a bridge currency.

Furthermore, the regulatory overhang has lessened significantly. A settlement with the U.S. Securities and Exchange Commission (SEC) in August 2025, which concluded with a $50 million penalty, has provided improved regulatory clarity for XRP in the United States market.

The confluence of robust institutional demand through ETFs, a rapidly shrinking accessible supply on exchanges, and growing on-chain utility creates a powerfully supportive environment. Whether XRP can sustain its breakout above $2.12 will be determined in the coming trading sessions.