Why did the XRP ETF attract $1.27 billion in funds, yet the price did not rise but instead fell?

Since its launch in November 2025, the US spot XRP ETF has accumulated a net inflow of $1.14 billion, but the XRP price has plummeted from a peak of $3.50 in October to the current $1.85, a decline of up to 47%. This paradox of “capital inflow and price decline” has caused confusion in the market. On-chain data reveals the truth: a surge in exchange deposits indicates retail selling pressure, offsetting the supply absorption driven by the ETF.

Why ETF Capital Inflows Can’t Save XRP

(Source: SoSoValue)

SoSoValue data shows that XRP ETF has maintained a continuous 29-day net inflow since its launch, with a total of $1.14 billion in accumulated funds. From an institutional investment perspective, this sustained buying should provide strong support for the price. Bitwise Chief Investment Officer Matt Hougan describes this dynamic as “structural bullishness,” because ETFs reduce circulating supply by purchasing tokens on the open market.

However, the effect of ETF absorption of supply is inherently gradual. While institutional funds are stable, they are dispersed over weeks or even months, gradually accumulating. In contrast, retail and short-term holders often sell in concentrated and intense waves. When market sentiment shifts to risk aversion, this asymmetry can cause ETF buying to be instantly overwhelmed.

More critically, although the inflow scale of XRP ETFs appears large, it is still small compared to Bitcoin and Ethereum ETFs. As of mid-December, Bitcoin ETFs have attracted over $57 billion, and Ethereum ETFs about $12 billion. When these two major assets’ ETFs experience massive redemptions in December, liquidity in the entire crypto market rapidly dries up, and smaller-cap coins like XRP bear the brunt.

Mathematically, if the $1.14 billion inflow is evenly distributed over a month, the daily average purchase would be about $38 million. But XRP’s average daily trading volume is between $2 billion and $3 billion, meaning ETF buying accounts for only 1.5% to 2% of daily volume. During panic-driven market conditions, such a proportion of buying cannot reverse the trend at all.

Three Major Selling Pressures Consume ETF Buying

Surge in Exchange Deposits

· CryptoQuant data shows continuous increase in XRP inflows to exchanges

· Retail and short-term holders’ selling activity has significantly risen

· Exchange net inflows usually indicate short-term selling pressure

Tax Loss Harvesting Season Effect

· US investors perform tax optimization at year-end

· Selling losing positions to offset capital gains taxes

· XRP dropping from $3.50 to $1.85 provides ample space for tax loss harvesting

Institutional Risk Reduction During Holidays

· Bitcoin ETF experienced over $800 million in single-day redemptions

· Institutions reduce positions at year-end to cope with liquidity shortages

· Risk aversion sentiment propagates from mainstream coins to altcoins

The first major selling pressure comes from retail panic selling. On-chain data clearly shows that XRP inflows to exchanges increased significantly in December. In the crypto world, transferring tokens from personal wallets to exchanges is often a precursor to selling. When the price drops from $3.50 to $2.50, many retail investors who bought at the high choose to cut losses and exit. As the price further declines to $1.85, more long-term holders also start to waver, triggering a chain of sell-offs.

The second major pressure is from tax loss harvesting. US tax law allows investors to sell losing positions to offset capital gains taxes, with December being the peak period for such operations. XRP’s 47% plunge from its peak offers investors a large space for tax loss harvesting. Many funds and high-net-worth individuals sell losing positions at year-end, planning to buy back in the new year. This technical selling pressure is unrelated to fundamentals but highly damaging.

The third major pressure stems from liquidity exhaustion in the overall market. Bitcoin ETFs experienced consecutive days of large redemptions in December, with single-day redemptions exceeding $800 million. When institutional investors withdraw from Bitcoin and Ethereum, liquidity in the altcoin market dries up first. The total crypto market cap declined by over $1.3 trillion in the last months of 2025, and this systemic risk dims any positive news for XRP.

Standard Chartered’s $8 Price Forecast Questioned by Market

(Source: Trading View)

Standard Chartered’s digital asset research team proposed a bullish scenario, predicting XRP could rise to around $8 in 2026, over 300% above the current price. This forecast is based on three assumptions: regulatory clarity, accelerated adoption of spot ETFs, and expanded institutional use cases.

However, the market generally doubts this target. First, $8 implies a market cap exceeding $450 billion, approaching Ethereum’s current market cap. Considering XRP is mainly used for cross-border payments rather than smart contract platforms, such valuation requires extremely optimistic application scenarios.

Second, Standard Chartered explicitly states this is the “most optimistic case” rather than a baseline expectation. Most other analysts and models forecast a range of $1 to $4 for 2026. In a conservative scenario, if XRP falls below the 100-week exponential moving average of $1.86, it could further decline toward the 200-week moving average at $1.39.

From a technical perspective, XRP’s current price of $1.85 is right at the 100-week EMA, a critical position for bulls and bears. If it effectively breaks below, the next support levels are the psychological $1.50 and the 200-week moving average at $1.39. Conversely, if it can hold above $1.86 and volume increases, the rebound target could be the previous resistance at $2.50.

The Real Deciding Factors for XRP in 2026

Setting aside Standard Chartered’s optimistic forecast, XRP’s actual trajectory in 2026 will depend on three variables. First is the final outcome of Ripple’s lawsuit with the SEC. Although Ripple achieved some victories in 2023, the case is not fully resolved. If a comprehensive settlement is reached or clear regulatory guidance is obtained, long-term uncertainty hanging over XRP will be alleviated.

Second is whether ETF capital inflows can continue and accelerate. The current accumulated inflow of $1.14 billion is impressive, but to have a substantial impact on the price, monthly inflows need to break through the thresholds of $500 million or even $1 billion. This depends on more institutional investors and wealth management platforms including XRP ETFs in their allocations.

Third is the macroeconomic environment. If the Federal Reserve begins a rate-cutting cycle in 2026 with larger-than-expected cuts, risk assets will benefit from systemic tailwinds. In such a scenario, the crypto market could restart a bull run, and XRP, as an asset with real use cases, will benefit. Conversely, if the economy slips into recession or geopolitical risks escalate, risk aversion will continue to suppress altcoin performance.