Why XRP ETF Momentum Fails to Lift Price Amid Institutional Demand and Regulatory Wins

The launch of U.S.-listed XRP ETFs in late 2025 marked a watershed moment for the cryptocurrency. After the SEC's August 2025 settlement with Ripple Labs, which affirmed XRP's status as a non-security, products from Bitwise, Canary Capital, and Franklin Templeton began channeling institutional capital into the asset. Cumulative net inflows into these ETFs now exceed $1.12 billion, representing nearly 1% of XRP's total market capitalization according to reports. Yet, despite this surge in demand, XRP's price remains stubbornly below $2.00, trading in a descending channel between $1.87 and $1.94 according to analysis. This divergence between institutional adoption and price performance raises a critical question: why does XRP ETF momentum fail to translate into a meaningful price rally?

The ETF Paradox: Structural Demand vs. Short-Term Selling

The answer lies in the interplay of structural and cyclical forces. While XRP ETFs have unlocked access to traditional brokerage accounts and retirement vehicles, their impact on spot prices is muted by two key factors. First, the T+1 settlement cycle of ETFs creates a lag between inflows and liquidity in the spot market. For example, Canary Capital's XRPC ETF saw $268 million in inflows within 72 hours of its launch, but this capital did not immediately bid up XRP's price. Instead, large holders liquidated over 200 million tokens in the same period, creating a dislocation between ETF-driven demand and on-chain selling pressure according to analysis.

Second, derivatives markets remain a drag. Taker buy volume in XRP futures contracts has plummeted from $5.8 billion in summer 2025 to $250 million, signaling reduced speculative activity. However, this decline in leverage has not offset the persistent selling from spot and derivatives traders. On-chain data reveals that realized profits-profits crystallized by early holders-have surged, further exacerbating downward pressure. The result is a market where ETF inflows represent long-term positioning, while short-term traders and whales dominate price action.

Regulatory Clarity ≠ Immediate Price Discovery

The SEC's ruling and CBOE's approval of the 21Shares XRP ETF have removed a major regulatory overhang have removed a major regulatory overhang, but they have not resolved the underlying market structure. XRP's utility in cross-border payments and tokenization-bolstered by the XRP Ledger's fast settlement times and low costs-provides a strong foundation for long-term demand according to analysis. Yet, price discovery remains constrained by the asset's history of volatility and the lingering skepticism of retail investors.

This is evident in the Fear & Greed Index, which has signaled "fear" despite ETF inflows and regulatory wins. The index's divergence from price mirrors patterns seen during the 2020–2021 bull market peak, raising concerns about a potential top. Meanwhile, on-chain metrics tell a mixed story: declining exchange reserves suggest reduced sell-side pressure, but whale activity in November 2025 indicates a distribution phase according to analysis.

A Tale of Two ETFs: XRP vs. Bitcoin and Ethereum

The contrast with Bitcoin and Ethereum ETFs is instructive. While XRP ETFs have recorded 30 consecutive days of net inflows, Bitcoin and Ethereum ETFs have seen outflows totaling $4.65 billion over the same period. For instance, Bitcoin ETFs lost $3.39 billion in net outflows, and Ethereum ETFs shed $1.26 billion according to analysis. This divergence highlights XRP's unique position as a "differentiated crypto exposure" in a market dominated by macroeconomic headwinds and risk-off sentiment according to analysis.

However, the lack of price responsiveness in XRP ETFs compared to their Bitcoin and Ethereum counterparts underscores a critical asymmetry. Bitcoin's ETF outflows reflect broader macroeconomic concerns, but XRP's price weakness is compounded by its own on-chain selling and derivatives dynamics. As one analyst noted, "XRP's ETF inflows are structural, but the spot market is still grappling with cyclical selling" according to analysis.

The Road Ahead: When Will Price Catch Up?

The long-term outlook for XRP hinges on whether institutional demand can outweigh short-term selling. Market commentator Zach Rector has modeled potential price targets based on ETF inflow multipliers. For example, a 200X multiplier with $50 billion in inflows could push XRP to $167.88 according to analysis. While such scenarios remain speculative, they underscore the latent demand embedded in ETF structures.

In the near term, XRP's price is likely to remain range-bound until one of two scenarios unfolds: (1) institutional inflows accelerate to a level that overwhelms spot and derivatives selling, or (2) macroeconomic conditions improve, reducing risk-off sentiment and boosting speculative activity. Until then, the divergence between XRP's fundamentals and price will persist-a reminder that regulatory clarity and institutional adoption are necessary but not sufficient for price discovery.

Conclusion

XRP's ETF momentum is a testament to the asset's growing legitimacy, but it also highlights the complexities of market structure. Regulatory wins and institutional flows have laid the groundwork for long-term demand, yet short-term selling, derivatives dynamics, and on-chain distribution continue to weigh on price. For investors, the key takeaway is clear: XRP's ETF-driven narrative is still in its early innings. The price may not reflect this yet, but history suggests that structural demand eventually wins out-provided the market can weather the noise.