XRP’s Diverging Signals: Price Weakness Meets Strong Fundamentals

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As January 2026 draws to a close, XRP's price action presents a study in contrasts. Trading near $1.91, the digital asset reflects a market at odds with itself. On one hand, bearish sentiment and price pressure dominate the short-term view. On the other, a surge in network utility, significant ETF inflows, and a dramatic reduction of tokens on exchanges paint a more constructive long-term picture. The central question for investors is which narrative will ultimately prevail.

A notable divergence has emerged in the exchange-traded fund landscape. Since their launch in November 2025, spot XRP ETFs have accumulated net inflows totaling $1.37 billion. Major providers including Canary Capital, Bitwise, Franklin Templeton, Grayscale, and 21Shares have collectively absorbed approximately 750 million XRP tokens. These products demonstrated notable resilience in early January. While Bitcoin ETFs saw four consecutive days of outflows amounting to $1.38 billion and Ethereum products lost $351 million, XRP-focused funds remained largely stable, even posting net gains. This suggests institutional appetite for XRP is moving counter to the wider cryptocurrency market trend.

The first outflow from XRP ETFs, a $40.8 million withdrawal, occurred on January 7th, ending a 43-day streak of positive inflows.

Network Activity Hits Multi-Month Highs

Beneath the surface price volatility, the XRP Ledger is demonstrating robust health. The network is currently processing between 1.5 and 1.8 million transactions daily. Activity peaked on January 13th with 1.45 million transactions settled in a single day—the highest volume recorded in 180 days. This utility spans cross-border payments, the tokenization of real-world assets, and decentralized finance (DeFi) applications.

A critical shift in token distribution is underway. The amount of XRP held on centralized exchanges has plummeted from around 4 billion tokens at the start of 2025 to between 1.5 and 1.7 billion by the end of December. This 57% drawdown marks the lowest level of exchange holdings since 2017/2018. This scarcity on trading platforms implies that even moderate buying pressure could exert a more pronounced upward influence on price compared to previous market cycles.

Price and Sentiment Reflect Short-Term Pessimism

From a technical perspective, XRP is currently confined to a narrow trading band between $1.90 and $1.95. The asset has shed nearly 19% from its early January peak and now trades 46% below its July 2025 high of $3.65. Key support is established in the $1.80 to $1.90 range, an area that has been tested multiple times. A decisive break below this zone could potentially trigger a move toward the $1.60 level, which represented a capitulation point in October 2025.

Market sentiment, as gauged by social media analytics from Santiment, has turned deeply negative. Historically, such periods of extreme fear often materialize late in a downward move and have frequently laid the groundwork for sharp price reversals, provided buyer confidence returns.

Ecosystem Expansion and Regulatory Clarity

Ripple continues to build out its ecosystem. The company's RLUSD stablecoin, which is fully backed 1:1 by U.S. dollar deposits, short-term U.S. Treasuries, and cash equivalents with monthly attestations, recently received a listing on Binance for spot trading on Ethereum. Support for the XRP Ledger is expected to follow.

The regulatory overhang has significantly lightened. The 2025 settlement with the U.S. Securities and Exchange Commission (SEC) provided clarity that secondary market sales of XRP do not constitute securities transactions. At the World Economic Forum in Davos, Ripple CEO Brad Garlinghouse expressed optimism, forecasting new all-time highs for the crypto market in 2026. Analysts at Standard Chartered have published projections of $8 for XRP by the end of 2026 and $12.50 by 2028, contingent on favorable market conditions.

On-Chain Patterns Echo Previous Cycles

A cautious note emerges from on-chain data analysis. The current holder structure shows similarities to early 2022, a period preceding months of sustained downward pressure for XRP. Recent buyers have accumulated at price points below the cost basis of investors who entered the market six to twelve months prior. In February 2022, XRP traded at $0.78; six months later, its price had fallen to $0.30.

The market now watches to see if the current structural shifts—diminished exchange supply, steady ETF demand, and growing network use—will be sufficient to avert a similar prolonged decline. It is worth noting that XRP can be moved quickly between platforms, making liquidity more flexible than raw holding numbers might suggest. Furthermore, XRP's price performance remains closely correlated with that of Bitcoin.

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