XRP is currently trading near $2.04, having experienced a more than 12% increase over the past month. However, the token is facing challenges in regaining strong upward momentum. In the last week, XRP saw a decline of close to 8%, as traders navigated a unique combination of institutional buying pressure and short-term market weakness.
With a market capitalization approaching $125 billion and daily trading volume exceeding $3.3 billion, XRP maintains its status as one of the most liquid cryptocurrency assets. The market is closely observing the psychological support level of $2, as significant inflows encounter increasing short exposure and waning retail conviction.
Sentiment Breakdown Creates a Contrarian Setup
Market sentiment surrounding XRP is currently experiencing one of the deepest fear zones recorded since October. Santiment data indicates that sentiment levels are mirroring the panic observed before a sharp twenty-two percent rebound on November 21. The Relative Strength Index (RSI) is hovering near 45, and the Parabolic SAR (SAR) indicator continues to flip into bearish territory.
Traders appear to be caught between disbelief and fatigue following a two-month decline of thirty-one percent. The current downward trend suggests structural weakness rather than blind panic. This implies that any potential reversal will likely emerge through increasing volume and a recovery in inflows, rather than purely emotional trading. Traders are actively searching for signs of short exhaustion, similar to patterns observed during previous rebounds.
Institutions Accumulate While Retail Steps Back
Despite retail traders exiting the market, institutional interest in XRP continues to grow. U.S. spot XRP ETFs have attracted $906 million in net inflows since their inception, with no days of outflows recorded. The flagship XRPC ETF alone now holds $336 million, surpassing all competing funds.
Franklin Templeton has listed XRP as a top-four holding within its regulated multi-asset crypto product. This trend highlights a clear divergence in market behavior: institutional portfolios are building long-term positions, while retail traders are shorting the asset. This scenario suggests a market where well-capitalized investors are accumulating quietly, anticipating a reduction in market fear.
Ripple’s $4B Expansion Reshapes Global Finance
Ripple has significantly expanded its presence in global finance through a series of acquisitions totaling $4 billion, including GTreasury, Rail, Palisade, and Ripple Prime. The company now possesses strategic control over treasury management, liquidity services, payments, and institutional crypto infrastructure. Regulatory advancements are further bolstering this expansion.
Approvals in Singapore and the UAE, along with FSRA authorization for the RLUSD stablecoin, solidify Ripple's position within the regulated payments ecosystem. Ripple also achieved a significant milestone in the United States when Bitnomial launched the first XRP spot product approved by the CFTC. This development places XRP alongside commodities like Treasuries on a federally regulated exchange. The market has not yet fully priced in this transformation, creating a notable gap between Ripple's operational dominance and XRP's current market performance.
On-Chain Data Reveals a Structural Split
The XRP Ledger is exhibiting its highest transaction velocity of the year at 0.0324, indicating robust network usage. Open interest has climbed to $3.85 billion, while funding rates remain negative, confirming substantial short positioning. A regional concentration is also evident: Upbit holds over six billion XRP, significantly more than Binance's 2.6 billion. This imbalance introduces the risk of region-specific liquidation waves during periods of volatility. While liquidity remains deep and participation strong, the overall direction is constrained by the pressure from leveraged traders.
Long-Term Holders Rotate as Whales Step In
The dormancy of long-term holders has dropped by ninety-one percent since mid-November, indicating that older XRP holdings are rarely being moved. Concurrently, cohorts that have held XRP for periods ranging from six months to three years have trimmed their positions, realizing profits. Institutions have absorbed a considerable portion of this volume through ETF demand, removing nearly half a percent of the total supply from circulation as ETFs surpassed one billion dollars in assets under management. Whales continue to acquire XRP while early holders reduce their exposure. This rotation is delaying a strong recovery but is building the foundation for a future supply squeeze once distribution activity subsides.
XRP is now entering a unique phase where institutional strength is beginning to outweigh retail fear, setting the stage for a potential market shift once internal pressures are resolved.