XRP’s Contradiction: Shrinking Supply Meets Market Skepticism

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As the year draws to a close, XRP presents a market contradiction. Its price remains trapped in a narrow, consolidating range, yet the volume of tokens readily available for trading is contracting significantly. Billions in value are being withdrawn from exchanges by institutional players, with new spot ETFs further absorbing liquidity. This dynamic raises a pivotal question: how long can subdued price action persist as the circulating supply continues to diminish?

Currently, the supply-side data from the blockchain tells a more compelling story than short-term price charts. The evidence points to a clear migration of liquid holdings away from public trading platforms and into the custody of professional investors.

Key developments include:

• Exchange Reserves Hit Multi-Year Lows: The amount of XRP held on centralized exchanges has plummeted over the past year, falling from approximately 4 billion tokens to around 1.5 billion. On Binance specifically, reserves have dropped to roughly 2.66 billion XRP, their lowest point since July 2024. While reporting aggregates may vary, the overarching trend of draining liquidity is unmistakable.
• ETF Inflows as a Primary Catalyst: Since their launch in November 2025, U.S. spot XRP ETFs have accumulated an estimated 750 million tokens. These assets typically enter long-term custodial storage, effectively removing them from the daily trading pool.
• Assets Under Management (AUM): Collectively, U.S. spot ETFs now manage about $1.25 billion in XRP. The Canary XRP ETF alone holds approximately $357 million, while the Franklin Templeton fund has surpassed the 100 million XRP mark.

This shift signals a gradual transition from short-term retail trading towards institutional, long-term investment. In aggregate, this could reduce medium-term selling pressure—provided that new inflows continue to outpace the tightening supply.

Technical Perspective: Testing a Critical Support Zone

Following a decline of roughly 30% in Q4 2025, XRP is navigating a vulnerable trading corridor. The current band between $1.80 and $1.90 represents a crucial support area, which previously acted as stiff resistance. The token is currently testing this zone from above, unable to stage a decisive breakout.

Technical indicators present a mixed picture. Short-term signals hint at seller exhaustion: the weekly Stochastic RSI has dipped below 20, indicating deeply oversold conditions. Similar setups in 2024 and mid-2025 preceded significant recovery rallies.

Conversely, a bearish divergence is evident on the weekly RSI chart. While the price moves sideways, the indicator is forming lower highs, suggesting weakening upward momentum. In parallel, open interest for XRP futures on Binance has fallen to around $450 million—the lowest level since November 2024. This withdrawal of speculative capital from the derivatives market points to fading conviction among traders.

From a chart perspective, immediate resistance levels are found at $2.08 and $2.50. A clear breakdown below $1.80 could open a path toward $1.50. Additional market data reveals that at $1.88, XRP trades just above its 52-week low and approximately 38% below its yearly high. An RSI reading of 28.8 further underscores the oversold nature of this price territory.

Upcoming Catalyst: The January Escrow Unlock

Shortly after the new year, XRP faces a recurring yet market-sensitive event. On January 1, 2026, Ripple is scheduled to release 1 billion XRP as part of its programmed escrow plan.

These monthly unlocks are routine but introduce temporary additional supply. Historically, Ripple has returned between 60% and 80% of the unlocked tokens back to escrow—in December 2025, the figure was 70%. The critical factor this time will be the proportion that remains liquid and how it interacts with fragile sentiment and a retreating derivatives market. The price reaction in the first trading week of 2026 will likely depend on whether ongoing ETF inflows and institutional demand can absorb the temporary supply increase.

Fundamental Progress: Banking, Stablecoin, and Regulatory Clarity

Alongside these market structure changes, Ripple continues to embed its ecosystem within the regulated financial sector. In early December, the company received preliminary approval for a National Trust Bank Charter from the U.S. Office of the Comptroller of the Currency (OCC). This move aligns Ripple with other regulated crypto custodians, allowing it to officially offer custody and settlement services under banking supervision.

Progress is also evident with its native USD stablecoin, RLUSD. The stablecoin is being utilized for cross-border settlements in several African markets via platforms like Chipper Cash and Yellow Card, addressing a Sub-Saharan African stablecoin market valued at approximately $54 billion. In Japan, RLUSD is being deployed for On-Demand Liquidity (ODL) through SBI, further expanding the use of the XRP Ledger in international payments.

On the regulatory front, clarity has improved substantially since Ripple's settlement with the U.S. Securities and Exchange Commission (SEC) in August 2025. The largely resolved litigation paved the way for the current wave of ETF products and bolstered institutional confidence. Furthermore, the anticipated CLARITY Act, set to take effect in January 2026, promises a legislative framework that will provide clearer definitions for digital assets in the United States.

Market Sentiment: Fear on the Surface, Accumulation Underneath

In terms of sentiment, XRP currently contrasts sharply with typical hype cycles. The broader crypto market "Fear and Greed Index" sits at 17, signaling extreme fear. Retail investor fatigue is palpable, reflected in low Google search volumes. Simultaneously, data depicts a market with low leverage, declining futures interest, and high institutional accumulation.

Some market observers describe this setup as a potential "most hated rally" scenario—an upward move that is initially met with widespread skepticism. Whether this materializes depends on two short-term factors: the defense of the $1.80 support zone despite the early-year escrow unlock, and the continuation of ETF inflows. If both hold, the current depressed price may later be viewed as a quiet accumulation phase. If either falters, XRP likely remains in a prolonged basing pattern.