XRP ETF Sees Largest Outflow, $92M Exit

What to Know:

• XRP ETFs experienced a significant $92.9 million outflow, signaling potential institutional selling pressure.
• XRP’s price declined by 6.42%, falling from $1.87 to $1.73, influenced by the ETF offloading.
• Technical indicators show XRP’s RSI at 36.43, suggesting bearish momentum but not yet oversold conditions.

XRP has recently faced headwinds as its exchange-traded funds (ETFs) experienced notable outflows, catching the attention of institutional and high-net-worth investors. This development occurs amidst broader market volatility, raising questions about the asset’s near-term prospects and the sentiment of sophisticated investors. Understanding these dynamics is crucial for assessing XRP’s role in diversified portfolios.

Institutional Exodus from XRP ETFs

The headline figure is the $92.9 million outflow from XRP ETFs within a 24-hour period. This marks the largest single-day outflow for these investment vehicles, suggesting a significant pullback by institutional holders. Such a rapid exit can amplify selling pressure in the underlying asset, as ETF providers may need to sell XRP to meet redemption requests. This behavior is reminiscent of post-launch profit-taking seen in other crypto ETFs, where initial enthusiasm gives way to more sober evaluation.

Price Decline and Market Reaction

The ETF outflows coincided with a 6.42% drop in XRP’s price, from an intraday high of $1.87 to $1.73. This price action confirms the impact of institutional selling pressure on the broader market. Breaching the $1.80 support level has further fueled bearish sentiment, potentially triggering stop-loss orders and additional selling. The increased trading volume, up 67.58% to $5.16 billion, largely reflects sell-offs rather than accumulation, reinforcing the negative outlook.

Technical Indicators and Market Sentiment

Analyzing technical indicators provides additional context. XRP’s Relative Strength Index (RSI) currently stands at 36.43, indicating bearish momentum. While not yet in oversold territory, a continued decline could trigger a rebound as the asset becomes undervalued. However, the prevailing market sentiment suggests that any potential recovery may be limited in the short term. This mirrors previous instances where oversold conditions provided only temporary relief in the face of sustained selling pressure.

Previous ETF Performance and Future Outlook

Earlier in January, XRP ETFs had shown promise, with combined holdings reaching $1.18 billion. Franklin’s XRPZ led the pack with $252.31 million. This positive momentum followed a strong December, where XRP even outperformed Bitcoin in terms of ETF demand. However, the recent outflows suggest a reversal of this trend. Investors are now awaiting potential catalysts in February to reignite interest in XRP. Such catalysts could include positive regulatory developments or renewed institutional buying.

Potential Catalysts for Reversal

Looking ahead, several factors could influence XRP’s trajectory. A return of institutional interest is crucial for a price reversal. This might be driven by clarity in regulatory frameworks or positive developments in Ripple’s ongoing legal battles. Additionally, broader market trends, such as increased adoption of blockchain technology and renewed interest in altcoins, could provide a tailwind for XRP. However, until these catalysts materialize, XRP may continue to face headwinds.

Related: XRP Escrow Amendment Signals Next Moves

Source: Original article