XRP ETFs Breaking Their 36-Day Inflow Streak and the Implications for Institutional Demand and Market Momentum

The recent $40.8 million outflow from U.S. XRP ETFs on January 7, 2026, marked the end of a 36-day streak of uninterrupted inflows, a period during which these funds absorbed a total of $1.25 billion. This event raises critical questions: Is this outflow a temporary pause in accumulation, or does it signal a broader shift in institutional sentiment toward crypto assets? To answer this, we must contextualize the outflow within the broader landscape of ETF flows, on-chain dynamics, and price trends for XRP, Bitcoin, and Ethereum.

The Context of XRP ETF Inflows

XRP ETFs emerged as a standout performer in late 2025, driven by regulatory clarity following the SEC's August 2025 settlement with Ripple Labs and the asset's real-world utility in cross-border payments. By December 2025, XRP ETFs had attracted $483 million in inflows alone, with total inflows from November 2025 reaching $1.3 billion-the fastest adoption rate for any altcoin ETF. This surge reflected institutional demand for assets with tangible use cases, contrasting with Bitcoin and Ethereum's roles as stores of value and speculative plays.

The first outflow, led by 21Shares' TOXR product, occurred against a backdrop of strong ETF inflows for Bitcoin and Ethereum in early January 2026. Bitcoin ETFs, for instance, saw $459 million in inflows for the week ending January 2, while Ethereum ETFs added $160.58 million. These figures suggest that the XRP outflow was an anomaly rather than a systemic shift, at least in the short term.

Contrasting Flows: Bitcoin, Ethereum, and XRP

The December 2025 outflows for Bitcoin and Ethereum ETFs-$1.09 billion and $564 million, respectively-were largely attributed to year-end tax-loss harvesting and portfolio rebalancing. In contrast, XRP ETFs continued to attract capital, with institutions viewing the asset as a complementary diversifier tied to real-world infrastructure. This divergence highlights a key distinction: while Bitcoin and Ethereum faced seasonal outflows, XRP's inflows were driven by structural factors, including new ETF mandates and post-SEC optimism.

Bitcoin's January rebound, with $1.2 billion in inflows over two days, underscores the resilience of institutional demand for the leading cryptocurrency. However, XRP's price trajectory tells a different story. Despite strong ETF inflows in December, XRP crashed 15% to $1.77, only to rebound to $2.20 by early January. This volatility suggests that ETF flows alone may not fully dictate XRP's price action, with on-chain metrics offering additional insights.

On-Chain Metrics and Price Signals

On-chain data reveals that XRP's exchange-held supply hit multi-year lows as ETF accumulation drained liquidity. This trend aligns with the broader narrative of institutional accumulation, where ETFs act as intermediaries between retail investors and the underlying asset. However, the December price drop-despite inflows-raises questions about the decoupling of ETF flows from spot prices. Analysts attribute this to speculative trading and macroeconomic factors, such as interest rate expectations, which may have overshadowed ETF-driven demand.

For Bitcoin, the January inflows coincided with a surge in ETFs absorbing circulating supply, creating potential long-term price support. XRP's on-chain metrics, meanwhile, suggest a market nearing a breakout above $2.22, a level that could validate the asset's utility-driven narrative.

Implications for Institutional Demand and Market Momentum

The $40.8 million outflow, while notable, must be viewed in the context of XRP ETFs' $1.25 billion inflow streak. This outflow likely reflects short-term portfolio adjustments rather than a reversal of institutional interest. Bitcoin's January recovery further reinforces the idea that institutional demand for crypto remains robust, albeit with varying dynamics across assets.

For XRP, the key question is whether the outflow signals a pause in accumulation or a broader shift in sentiment. The data leans toward the former: XRP ETFs remain net positive for 2025, and on-chain liquidity constraints suggest continued institutional participation. However, the price volatility highlights the need for caution. Institutions may be treating XRP as a complementary asset rather than a core holding, which could limit its upside potential compared to Bitcoin.

Conclusion

The end of XRP ETFs' 36-day inflow streak is a minor blip in an otherwise strong narrative of institutional adoption. While the $40.8 million outflow warrants attention, it does not negate the structural factors driving XRP's appeal-regulatory clarity, real-world utility, and ETF-driven liquidity. For investors, the focus should remain on on-chain metrics and macroeconomic trends, which will ultimately determine whether XRP can sustain its momentum or if the outflow marks the beginning of a more nuanced phase in its institutional journey.