XRP is entering a crucial period as institutional investors, fueled by a series of newly introduced exchange-traded funds (ETFs), accelerate its adoption as a mainstream asset. The gradual introduction of XRP ETFs—spearheaded by firms such as 21Shares, Franklin Templeton, Grayscale, and Bitwise—has generated sustained momentum, with total inflows surpassing $666 million since mid-November. This surge has propelled XRP to a 12% gain over the past week, even as the broader crypto market experiences turbulence, as large-scale investors seek exposure to the world’s fourth-largest cryptocurrency.
The debut of the 21Shares XRP ETF (TOXR) on December 1 is particularly notable, as it marks the first time a European issuer has brought such a product to the U.S. market. Leveraging its established presence in crypto ETPs, 21Shares aims to capture a significant portion of the growing institutional demand.
The influx of ETF-driven interest is fundamentally altering XRP’s market landscape. Unlike Bitcoin, which saw 11 spot ETFs launch simultaneously in 2024, XRP’s staggered ETF rollouts have created a series of ongoing catalysts. Each new approval draws renewed media attention and attracts additional institutional capital. This approach has allowed XRP to maintain upward price momentum, avoiding the consolidation phase that followed Bitcoin’s ETF launches. Notably, Franklin Templeton’s XRPZ and Grayscale’s GXRP ETFs saw first-day inflows of $3 million and $164 million, respectively, highlighting the sector’s strength.
The rapid expansion of ETF activity has also disrupted traditional liquidity patterns. Billions of XRP tokens have moved from exchanges such as Binance and Kraken into ETF custodial accounts, reducing available liquidity on trading platforms and increasing price swings. Analysts observe that even relatively modest trades—such as $15 million orders—can now trigger hourly price fluctuations of 12-18%, a stark contrast to the period before ETF launches. This trend mirrors developments seen with Bitcoin and Ethereum ETFs, where arbitrage mechanisms help stabilize prices despite thinner exchange volumes. For XRP, however, the shrinking liquidity pool has introduced greater unpredictability, with daily trading volumes on centralized exchanges dropping below $1 billion.
The limited availability of XRP for ETF holdings is adding another layer of complexity. With ETFs now controlling over 300 million XRP and over-the-counter liquidity rapidly diminishing, experts warn of a looming supply shortage. Jake Claver from Digital Ascension Group estimates that in just one week, ETFs have absorbed 800 million XRP from private liquidity sources, forcing them to increasingly turn to public exchanges for further acquisitions. This shift could lead to sharp price surges, as demonstrated by a recent incident on Kraken where XRP briefly soared to $91. Regulatory restrictions in the U.S. prevent ETFs from accessing Ripple’s escrow reserves, which contain 34.7 billion XRP, further intensifying the supply squeeze.
On-chain data shows significant repositioning among XRP’s largest holders. In a single day, 78 new whale accounts accumulated 77.32 million XRP, while an equal number of existing wallets offloaded over 108.5 million tokens. This rotation suggests that major investors are strategically adjusting their positions in anticipation of potential price shifts, balancing between accumulation and distribution. Meanwhile, ETF inflows have driven XRP’s market capitalization to $135 billion, reinforcing its status as a leading digital asset.
The coming weeks will be a critical test for XRP as ETF demand collides with tightening liquidity and active whale movements. Analysts predict that XRP ETFs could amass $6.7 billion in assets under management within a year, following a trajectory similar to Bitcoin’s early ETF growth. However, the path to a $5 price target remains uncertain, as evolving liquidity and supply conditions create a highly volatile yet potentially rewarding environment for investors.