XRP Downtrend Deepens Amid Rising Inflows

What to Know:

• XRP faces selling pressure as exchange inflows surge, signaling potential further price declines.
• Macroeconomic factors and profit-taking after a rally contribute to the downward trend.
• Despite price struggles, XRP spot ETFs show resilience with significant institutional inflows, impacting overall liquidity.

Ripple’s XRP is navigating turbulent waters, struggling to maintain its price levels amid increasing selling pressure. Despite brief recovery attempts, the cryptocurrency has faced repeated rejections near the $1.90 mark. Recent data indicates a notable intensification of selling, leading to a substantial correction in XRP’s value, dropping roughly 50% from its recent high.

Rising Exchange Inflows

Analysis from CryptoQuant highlights a surge in XRP inflows to centralized exchanges, particularly Binance, which dominates the token’s trading volume. These inflows are often interpreted as a precursor to potential selling activity. Since December 15, daily XRP inflows to Binance have escalated significantly, ranging from 35 million to 116 million XRP, peaking on December 19. This trend suggests a shift in investor behavior, with long-term holders cashing in profits and newer investors selling at a loss.

Profit-Taking and Capitulation

The combination of profit realization by long-term holders and capitulation by newer market participants has intensified the downward pressure on XRP’s price. The analytics firm suggests that as long as these high exchange inflows persist or increase, XRP is unlikely to enter a steady accumulation phase. Consequently, the current correction could extend and deepen, increasing downside risks in the near term.

Institutional Appetite for XRP ETFs

Despite the challenges in the broader market, U.S. investors have shown an appetite for spot XRP ETFs. These investment vehicles have demonstrated resilience, even outperforming their Bitcoin and Ethereum counterparts since their launch. This suggests continued institutional interest in XRP as an asset class, irrespective of short-term price volatility.

ETF Inflows and Market Impact

Data from SoSoValue reveals that since their launch in November, spot XRP ETFs have attracted $1.14 billion in inflows as of December 26. The total assets held by these ETFs have also climbed to $1.25 billion. These inflows indicate a strong institutional demand for XRP exposure, which can provide a degree of stability and liquidity to the XRP market, even as it faces headwinds from other sources.

Macroeconomic Context

The performance of XRP and other cryptocurrencies is also influenced by broader macroeconomic factors. Interest rate decisions, inflation data, and regulatory developments can all impact investor sentiment and capital flows into the crypto market. Investors should consider these factors when assessing the potential trajectory of XRP and the broader digital asset landscape.

In conclusion, XRP is currently under pressure due to increased exchange inflows and profit-taking, which could lead to further price declines. However, the strong inflows into spot XRP ETFs suggest continued institutional interest, providing a potential buffer against further downside. Investors should monitor exchange inflows, macroeconomic indicators, and regulatory developments to assess XRP’s near-term prospects.

Related: XRP ETF News: Expert Signals Key Developments

Source: Original article