XRP News Today: Institutional XRP ETFs Drive Scarcity, But Crypto Slump Limits Price Gains

Jake Claver, a prominent market analyst, has flagged a critical shift in the XRP market, asserting that institutional demand via newly launched exchange-traded funds (ETFs) is rapidly depleting the over-the-counter (OTC) supply of the asset. This development, he argues, could catalyze a sharp price surge if liquidity constraints persist. The phenomenon mirrors Bitcoin's ETF-driven rally earlier this year, but with a key caveat: XRP's smaller market capitalization may amplify the impact of ETF inflows.

The U.S. regulatory landscape has shifted under SEC Chair Gary Gensler's "Project Crypto" initiative, which prioritizes disclosure over enforcement. This has enabled a wave of XRP ETF approvals, including Grayscale's GXRP and Bitwise's XRP ETFs, which began trading on the NYSE in November. These products offer investors direct exposure to XRP without the complexities of custody or wallet management, a structure that has historically attracted billions in inflows for Bitcoin and Ethereum ETFs according to market analysis.

Market analysts highlight the structural advantages of spot ETFs. Unlike futures-based alternatives, they provide direct ownership of the underlying asset, enhancing liquidity and transparency. For XRP, this means institutional buyers can now access the token through regulated brokerage platforms, bypassing the fragmented OTC market. Canary Capital's XRPC ETF, for instance, saw $59 million in trading volume on its debut, yet XRP's price still dipped 4.3% amid broader selling pressure. This paradox underscores the challenge of balancing ETF demand with existing market dynamics.

The liquidity crunch hypothesis, advanced by analyst FeFe, posits that $10 billion in ETF inflows could exhaust XRP's circulating supply, forcing prices upward. FeFe argues that ETFs will require substantial token purchases to back their shares, creating artificial scarcity. At current levels, XRP trades at $2.11, but models suggest a potential rise to $47 if inflows trigger a supply squeeze. However, skeptics note that the broader crypto market remains weak, with Bitcoin down 25% since October and over $1 trillion in value lost across major assets.

The mixed performance of XRP ETFs further complicates the outlook. While Bitwise's XRP ETF has attracted $22 million in volume, XRP's price has stagnated. Franklin Templeton's XRPZ ETF, launched in mid-November, briefly boosted XRP by 8% but failed to sustain momentum. These outcomes reflect the dual forces at play: institutional demand versus macroeconomic headwinds.

Looking ahead, the competitive ETF landscape could reshape XRP's trajectory. With 10 spot XRP ETFs now listed, including offerings from Grayscale, Bitwise, and 21Shares, the asset is gaining legitimacy in traditional finance. However, the crowded market may dilute the impact of individual products. Analysts project that XRP could follow Bitcoin's post-ETF trajectory - a 103% rise over a year - but most models cap the price at $6–$11, far below the $168 peak predicted by hyperbolic scenarios.

The regulatory environment remains a wildcard. While the SEC's recent approvals signal openness, ongoing scrutiny of market manipulation risks could dampen enthusiasm. XRP's unique position as a cross-border payment asset may offer long-term resilience, but near-term volatility is likely to persist.