XRP Mixed Signals: Korean Reserves Drop, ETFs See First Outflow

XRP has gained momentum in early 2026, with U.S. spot ETFs recording over $1 billion in cumulative inflows since their launch in mid-November. The inflows suggest growing institutional demand, particularly among large asset managers. On-chain metrics also show a reduction in XRP held on centralized exchanges, which may indicate investors moving tokens into cold storage or custody solutions.

Exchange reserves on South Korean platforms like Upbit and Bithumb have seen sharp declines, with XRP balances falling by about 22 million tokens in early January. This pattern has occurred before during previous rallies and may signal long-term positioning. Whale activity on the XRP Ledger has also increased, with 2,802 large transactions recorded in early January.

However, signs of softening demand have emerged. On January 7, U.S. spot XRP ETFs recorded their first net outflow since their launch, with $40.8 million leaving the market. This outflow contrasts with the strong inflow trend and raises questions about the sustainability of the current rally.

Why the Move Happened

The sharp decline in Korean exchange reserves mirrors patterns from the late 2024 rally, when XRP began leaving platforms like Upbit ahead of a 560% price increase. Such outflows may reflect investors moving assets into long-term storage, which typically reduces short-term selling pressure. This trend is often associated with accumulation by large holders rather than panic selling.

Large on-chain activity has intensified, with the XRP Ledger logging over 2,000 whale transactions—transfers worth $100,000 or more—on January 5. Whale activity can signal market confidence, particularly when large transfers are made off exchanges, indicating positioning for long-term price moves.

How Markets Responded

XRP's ETF inflows have been strong overall, with the funds registering significant daily trading volumes. However, the first outflow on January 7 suggests market participants may be taking profits or reassessing their exposure. Despite the outflow, the ETF market remains active, with cumulative inflows exceeding $1.25 billion as of early January.

WisdomTree, a major asset manager, withdrew its XRP ETF application with the SEC on January 6, citing no further action at this time. The firm had previously filed its application in December 2024 but decided to pull out amid a saturated market. This decision has drawn speculation that WisdomTree may be preparing for a larger player like BlackRock to enter the XRP ETF space.

The price of XRP dropped nearly 6% following the news of WisdomTree's withdrawal. The token had been trading near $2.30 before the pullback, but the decline raised concerns about the sustainability of the current rally. XRP's price action has historically shown resilience after pullbacks, particularly when supported by strong on-chain and ETF trends.

What Analysts Are Watching

Analysts remain divided on the sustainability of the current XRP rally. Some suggest the ETF outflow is a short-term correction rather than a reversal in the broader trend. Others point to the tight supply dynamics on exchanges and strong institutional participation as signs of deeper market strength.

Technical analysts continue to project an $8 price target for XRP in 2026, citing long-term formations and Fibonacci extensions. However, near-term support and resistance levels remain key for determining whether the rally will continue. Support levels around $2.05 to $2.10 are critical for maintaining the current uptrend.

The regulatory environment remains a key factor. Ripple's recent legal victory and the potential for U.S. banking charter approval could unlock new institutional demand for XRP. If the CLARITY Act passes and XRP gains broader banking access, it could attract pension funds and sovereign wealth allocations, potentially pushing the token to new highs.

Market observers are also watching for further ETF applications and approvals, particularly from major asset managers like BlackRock and Vanguard. The speed of ETF inflows and the pace of institutional adoption will be key indicators of XRP's future trajectory. Analysts agree that while the current rally shows strong technical and on-chain support, long-term success will depend on the translation of Ripple's payment utility into tangible token value.