XRP ETF Potential Amid Network and Market Weakness

The XRP ecosystem in 2025 presents a paradox: robust institutional adoption and regulatory progress coexist with declining retail-driven on-chain metrics. As the U.S. Securities and Exchange Commission (SEC) prepares to finalize decisions on multiple XRP ETF applications by October 2025, investors must weigh the asset's long-term viability against a backdrop of mixed network activity and market participation.

On-Chain Metrics: Strengths and Weaknesses

XRP's on-chain performance in 2025 reflects both resilience and fragility. Daily active addresses surged to record levels, exceeding 360,000 in Q1 2025, driven by cross-border settlements and decentralized exchange (DEX) activity. Transaction volume averaged 2.14 million daily transactions, with 75% settled in under 5 seconds, underscoring the XRP Ledger's efficiency. DEX and OfferCreate transactions grew by 40% year-over-year, signaling a shift toward decentralized trading and token issuanceXRP on-chain metrics - XRP Authority^[2].

However, critical weaknesses persist. Daily new wallet creation plummeted by 80% from 30,000 to below 5,000 by June 2025, raising concerns about retail investor fatigueXRP ETF Approval Looms: Why Institutional Adoption and Regulatory Clarity Make It a 2025 Must-Have^[5]. Total transactions and payments on the XRP Ledger declined by 17.67% and 26.16%, respectively, in September 2025, despite a 14.19% increase in active wallets. This divergence suggests a maturing network where existing users drive activity, but new adoption lags. Additionally, over 70% of XRP's realized cap was accumulated near recent highs, a historically fragile structure often associated with market topsFull List of XRP ETFs Awaiting SEC Approval^[3].

Institutional Adoption and ETF Momentum

While retail participation wanes, institutional adoption of XRP has surged. Ripple's On-Demand Liquidity (ODL) solution and strategic partnerships with financial giants like Santander and BNY Mellon have solidified XRP's role in cross-border payments. The Grayscale XRP Trust saw a 40% increase in holdings in 2025, reflecting growing institutional confidenceXRP ETF Approval Looms: Why Institutional Adoption and Regulatory Clarity Make It a 2025 Must-Have^[5]. Meanwhile, RippleNet now connects 300+ financial institutions across 45+ countries, cementing XRP's utility in enterprise use cases.

The regulatory landscape has also shifted dramatically. The SEC's legal settlement with Ripple and a favorable court ruling confirming XRP is not a security have provided critical clarity. This has accelerated ETF approvals, with the SEC reducing review timelines from 240 to 75 days in 2025. Major asset managers—including Grayscale, 21Shares, and Bitwise—have submitted XRP ETF applications, with final decisions expected by October 25, 2025Full List of XRP ETFs Awaiting SEC Approval^[3]. The REX-Osprey XRP ETF, already listed on the CBOE, has demonstrated strong initial demand. Analysts project a potential $5 billion inflow into XRP ETFs by late 2025, driven by institutional and retail investors seeking regulated exposureXRP ETF Approval Looms: Why Institutional Adoption and Regulatory Clarity Make It a 2025 Must-Have^[5].

Balancing Risks and Opportunities

The interplay between on-chain weakness and institutional strength raises key questions. Declining new wallet creation and speculative positioning (e.g., falling open interest in XRP derivativesXRP Whale Accumulation Signals Undervalued Market Potential^[4]) suggest reduced retail enthusiasm. Yet, whale accumulation of 310 million XRP in Q3 2025—pushing large holders' total holdings to 8.11 billion XRP—indicates sustained institutional confidenceXRP Whale Accumulation Signals Undervalued Market Potential^[4]. Additionally, XRP's EVM-compatible sidechain has enabled 1,400 Ethereum-style smart contracts in its first week, expanding its DeFi utility while maintaining low feesXRP Whale Accumulation Signals Undervalued Market Potential^[4].

The ETF approval timeline remains a critical variable. If the SEC approves multiple XRP ETFs in October 2025, it could catalyze a new wave of institutional capital, offsetting on-chain headwinds. However, the recent 15.24% decline in XRP's market capitalization to $87.56 billion, despite a 17.64% increase in DEX volume, highlights the asset's vulnerability to macroeconomic pressures.

Conclusion: A Calculated Long-Term Bet

XRP's ETF potential hinges on its ability to convert institutional adoption into sustained price appreciation. While on-chain metrics like new wallet creation and speculative positioning remain bearish, the asset's role in cross-border settlements and DeFi infrastructure offers a durable value proposition. Regulatory clarity and the SEC's accelerated approval process further reduce uncertainty for investors.

For long-term holders, the key is to monitor October 2025 ETF decisions and subsequent inflows. If institutional demand outpaces retail caution, XRP could reassert its position as a top-10 cryptocurrency. However, investors must remain vigilant about macro risks and the fragility of its on-chain structure. In a market where narratives often outpace fundamentals, XRP's ETF-driven institutionalization may yet prove to be its most compelling story.