XRP ETF Dynamics: Can Institutional Demand Justify a $3.50 Price Target?

The XRP market is undergoing a seismic shift driven by institutional demand, with ETF inflows reshaping supply dynamics and price elasticity. As of November 2025, XRP ETFs have recorded $643–$666 million in net inflows in their first month of trading, with a single-day record of $243 million on November 14. This surge, led by major issuers like Grayscale, Franklin Templeton, Bitwise, and Canary, has already absorbed 339 million XRP tokens-representing 0.34% of the circulating supply according to market data. With regulatory clarity post-SEC–Ripple settlement and a price of $2.20, XRP is outperforming Bitcoin and Ethereum in ETF inflow performance. But can this institutional frenzy justify a $3.50 price target? Let's dissect the mechanics.

ETF-Driven Supply Absorption: A Throttling Mechanism

Chad Steingraber, a leading XRP analyst, has developed a price elasticity model to quantify how ETF inflows interact with XRP's supply. His analysis reveals a critical dynamic: price acts as a natural throttle for institutional accumulation. At lower prices, ETFs can absorb vast quantities of XRP, but as prices rise, the cost per unit increases, slowing demand. For example:
- At $11.25 (a 5X increase from current levels), ETFs could purchase .
- At $22.5 (10X), annual demand drops to .
- At $45 (20X), absorption plummets to .

This inverse relationship between price and supply absorption suggests that XRP's price must rise to prevent rapid depletion of its public supply. Steingraber estimates that if ETFs collectively acquire 20–30 million XRP daily, a supply shock could occur within months. Over a year, this pace could drain nearly the entire public supply, creating upward pressure on prices.

On-Chain Liquidity Constraints: A Catalyst for Price Discovery

The surge in ETF inflows has already begun to tighten on-chain liquidity. Binance's XRP reserves have collapsed by 300 million tokens in a single month, reflecting a structural shift in ownership toward ETFs and long-term holders. Analysts project that if current accumulation rates persist, ETFs could absorb 17.28 billion XRP annually, drastically reducing available liquidity and forcing prices higher.

This liquidity crunch is already manifesting in public markets. XRP's price has stabilized around $2.20, but technical resistance at $2.63 looms. If ETFs continue to source XRP from public exchanges, the resulting scarcity could trigger sharp price adjustments. Steingraber notes that even without price appreciation, the sheer scale of ETF demand could create structural pressure to push XRP toward $3.50 or higher.

The $3.50 Threshold: A Strategic Inflection Point

While Steingraber's model does not explicitly cite $3.50, the underlying logic supports its plausibility. At this price level, ETFs would face a critical inflection point:
1. A $3.50 price would reduce annual ETF demand to approximately 1.8 billion XRP (based on Steingraber's extrapolation of price elasticity curves).
2. With ETFs already consuming 0.5% of XRP's market cap, a $3.50 price would require ETFs to source $1.75 billion in daily inflows to maintain current absorption rates. This is feasible given the $7–$10 billion annual inflow projections according to market analysis.
3. Price increases are necessary to prevent supply exhaustion.

Moreover, historical analogies to Bitcoin's post-ETF trajectory suggest XRP could follow a similar 100X trajectory to $220. However, $3.50 represents a more immediate and achievable target given current inflow dynamics.

Strategic Entry Point: Buy the Catalyst, Not the Noise

For investors, the key takeaway is clear: XRP's price must rise to accommodate ETF-driven demand. With ETFs already absorbing 339 million XRP and on-chain liquidity tightening, the market is primed for a breakout. A $3.50 price target becomes increasingly justified as ETF inflows continue to outpace supply availability.

The current price of $2.20 offers a strategic entry point, particularly for those betting on the structural adoption of XRP ETFs. If the $2.20 support level holds and ETF inflows maintain their momentum, XRP could test $2.63 resistance and eventually approach $3.50 as liquidity constraints intensify.

Conclusion

XRP's ETF-driven rally is not a short-term fad but a structural shift in institutional demand. Chad Steingraber's price elasticity model and real-world inflow data confirm that rising prices are inevitable to prevent supply exhaustion. With $3.50 within reach and regulatory tailwinds in place, now is the time to position for the next leg of this XRP bull run.