XRP is trading around US$1.87 as of December 29, supported by a sharp tightening of supply on centralized exchanges and sustained institutional demand through spot exchange-traded funds. The token has outperformed broader daily movements in the crypto market, with analysts pointing to structural shifts rather than short-term speculation as the key driver.
Data from 2025 shows a significant contraction in the amount of XRP held on centralized exchanges, declining from roughly 4 billion tokens at the start of the year to about 1.5 billion by late December. This reduction reflects a steady movement of tokens into long-term custody solutions, including institutional wallets and ETF holdings, effectively reducing the liquid supply available for immediate trading.
Spot XRP ETFs, launched in November 2024, have played a central role in this shift. Since inception, the products have recorded cumulative net inflows exceeding US$1.14 billion, absorbing an estimated 750 million XRP from exchanges. Market observers note that these flows have been consistent rather than episodic, suggesting strategic allocation by asset managers and long-term investors rather than short-term trading activity.
The supply squeeze is occurring alongside improved regulatory clarity. Ripple’s settlement with the U.S. Securities and Exchange Commission in August 2025 removed a major overhang that had constrained institutional participation for years. With legal uncertainty largely resolved, XRP has increasingly been treated as a compliant digital asset within regulated investment structures.
Beyond market mechanics, growing real-world usage has reinforced investor confidence. Ripple’s On-Demand Liquidity platform continues to expand its role in cross-border payments, while the company’s USD-backed stablecoin, RLUSD, has gained traction in treasury operations and as collateral on institutional platforms. These developments have strengthened the narrative that XRP is evolving from a speculative token into infrastructure-linked financial technology.
Analysts caution that if ETF inflows persist at current levels while exchange balances continue to decline, the market could face a supply shock by early 2026. Such a scenario would amplify price sensitivity to new demand, potentially increasing volatility but also reinforcing the asset’s scarcity dynamics.
While near-term price movements will still be influenced by broader crypto market conditions, the combination of constrained supply, institutional absorption, regulatory clarity, and expanding utility points to a longer-term rebalancing of XRP’s market structure. Investors are increasingly assessing the asset not just on momentum, but on fundamentals tied to adoption, liquidity flows, and infrastructure relevance.
XRP faces 2026 utility test as crypto market shifts from hype to fundamentals
