XRP's $46M Derivatives Liquidation vs. $1.6B ETF Flows: A Liquidity Battle

XRP's price collapsed more than 16% in a single day, tumbling to about $1.29. This severe move was directly amplified by forced selling in derivatives markets, where roughly $46 million in XRP liquidations occurred over the same period. The bulk of that forced selling-about $43 million-came from wiped-out leveraged long positions, turning the selloff into a self-reinforcing event.

Technically, the breakdown was decisive. The price broke below a key support zone around $1.44, flipping that area into overhead resistance. This loss of a critical floor left the next major psychological target at $1.00, with little recent trading history to cushion a further drop. The chart pattern showed a slow bleed followed by a sharp late-session plunge, a classic sign of stop-loss triggers from leveraged traders.

This price action starkly contrasts with recent positive institutional developments for XRP and Ripple. Despite announcements of new DeFi access and e-money licenses, the news failed to lift sentiment. The liquidation event underscores that XRP's near-term price is dominated by positioning and momentum, not fundamentals. The token is currently trading like a leverage unwind in progress.

Institutional Flow: A Contrasting Positive

While spot prices are under pressure, a separate institutional trend is building. Spot U.S. XRP ETFs have attracted over $1.6 billion in assets since their launch, with recent daily flows averaging about $75 million. This steady capital inflow signals strong demand from traditional investors seeking regulated exposure, a fundamental positive that has been consistent since mid-January.

A key development in institutional utility is the expanded partnership between digital asset custodian Hex Trust and the Flare blockchain. This integration provides a secure, compliant on-ramp for funds to access XRP-focused DeFi, enabling them to mint wrapped tokens and stake native assets without exposing custody to hot wallet risks. It's a tangible step toward making XRP usable collateral in institutional strategies.

Yet this positive flow is not offsetting the larger account selling in the spot market. Despite the ETF inflows, the broader spot tape shows repeated spikes and a stressed range, with prices down sharply from recent highs. The institutional capital is coming in, but it's being overwhelmed by leveraged selling and macro-driven deleveraging. The disconnect is clear: fundamentals are improving, but price action is still dictated by positioning and liquidity events.

The immediate outcome hinges on a clash between two forces: the relentless pressure from macro-driven deleveraging and the steady, institutional capital flowing into spot ETFs. The primary risk is that a more hawkish Federal Reserve stance continues to tighten the screws. With futures now pricing about two cuts for 2026 instead of deeper easing, excess liquidity for speculative assets diminishes. This structural headwind amplifies liquidations, as seen in the roughly $6.6 million in XRP longs wiped out in a single day. For XRP, a high-beta crypto, this means forced selling will persist as long as macro conditions remain restrictive.

The key catalyst for a reversal is whether ETF inflows can consistently outpace this spot selling and derivatives unwinding. The institutional demand is real, with spot U.S. XRP ETFs holding over $1.6 billion in assets and averaging about $75 million in daily flows. But this capital is currently being overwhelmed. The battle is a test of underlying demand strength: can the steady, regulated flow from ETFs build enough momentum to absorb the violent, leveraged selling spikes?

The critical technical level to watch is the $1.00 psychological target. A break below this level would likely trigger further leveraged selling, accelerating the decline. Conversely, a sustained hold and bounce from this zone could signal that the worst of the forced deleveraging is over and that institutional demand is starting to reassert itself. The next few days will show which force wins.