Despite a broader market enjoying green ETF inflows, Ripple's XRP is currently charting a different course, signaling a notable decline in structural support and investor confidence. Recent data points to a cooling enthusiasm across key investor cohorts, suggesting a pivotal shift in its market dynamics.
XRP's Fading Institutional Demand
The initial surge of capital into XRP-related ETFs, which saw total net assets reach an impressive $1.24 billion, has significantly tapered off. Daily inflows have dwindled, with several recent sessions showing minimal new capital entering the market. While overall assets remain elevated, this slowdown indicates that the initial wave of ETF-driven demand, which previously helped stabilize XRP's price through quiet institutional buying and whale accumulation, is now receding. This thinning support leaves XRP more exposed to market volatility.
Long-Term Holders Exit Amidst Cooling Derivatives
Adding to the concerns, long-term holders (LTHs) are visibly reducing their exposure to XRP. Wallets holding XRP for 2-3 years, typically considered a stable cohort, have seen their share of supply plummet from 14.26% in late November to approximately 5.66% by late December. This significant drawdown suggests profit-taking or a strategic retreat, further weakening the coin's fundamental support. Concurrently, the derivatives market reflects a similar sentiment, with XRP's Open Interest (OI) on Binance dropping to $450 million—its lowest level since November 2024. This sharp decline signifies widespread position closures, particularly from leveraged longs, indicating that traders are stepping away rather than anticipating potential surges, thus highlighting a palpable thinning of speculative confidence. The combined effect of fading institutional demand, LTH exits, and reduced speculative activity in derivatives paints a picture of diminishing confidence in XRP. Until renewed participation and demand emerge, XRP's price action is likely to remain fragile and highly reactive to market sentiments.
