XRP unknowingly builds a "spring-like" market structure: the gap between institutional funds and individual investors' expectations accelerates

Looking back at 2025, XRP has become one of the projects with the most peculiar dualities in the cryptocurrency market. While disappointed individual traders continue to sell off, institutional investors’ funds are quietly but steadily building positions. What could this twisted phenomenon indicate for the future?

“Silent Advance” of Institutional Funds vs. Disappointment of Individual Investors

The numbers tell the story. According to CoinShares data, XRP investment products alone attracted approximately $70.2 million in net new capital during the last trading week of December. Monthly inflows exceeded $424 million, recording the best performance among all listed crypto investment products for that month.

In contrast, during the same period, Bitcoin products experienced $25 million in outflows, and Ethereum funds faced $241 million in capital outflows.

However, the scene in the spot market is entirely different. As of reporting time, XRP is trading around $1.87, down 15% month-to-month, and remains the lowest performer among the top 10 cryptocurrencies by market cap. This gap between “on-paper demand” and “actual selling pressure” suggests a fundamental change in the composition of market participants.

Disappointed individual investors are acting based on technical trading logic. Meanwhile, new institutional entrants are operating based on process and allocation models.

Ripple’s “Financial Network Integration” Strategy Redefines XRP’s Value Foundation

Interestingly, some institutional investors are viewing interest in XRP-related products within the broader context of corporate strategy.

In 2025, Ripple accelerated the rebuilding of financial infrastructure. Announcing acquisitions of prime broker Hidden Road and enterprise financial software company G Treasury, Ripple is simultaneously rolling out the dollar-backed stablecoin RLUSD.

Hidden Road clears trillions of dollars in transactions annually for hundreds of institutional clients, while G Treasury serves over 1,000 corporate clients worldwide.

Once these acquisitions are fully integrated, Ripple will transform from a traditional payment company into a “vertically integrated digital asset infrastructure” spanning settlement, custody, prime brokerage, and corporate treasury management.

In this scenario, inflows into XRP ETP are not merely speculative on tokens but are positioning for the next-generation international financial pipeline.

“Stable Absorption” Since October and the Dynamics of a New Category

Since the launch of a physically-backed XRP product listed in the US in mid-October 2024, this category has attracted over $1 billion in net inflows. This stable absorption pattern is entirely different from the volatile flows seen in traditional Bitcoin and Ethereum ETFs.

Canary XRP ETF (XRPC) has emerged at the forefront of this new trading trend. According to SoSo Value data, it has gathered over $300 million since launch and set a record for first-day trading volume among US ETFs.

The size of the fund’s AUM (assets under management) is significant because it:

• Provides liquidity products that can be integrated into standard securities accounts and custody workflows for wealth managers and model portfolio providers
• Enables inclusion in multi-asset fund rebalancing processes
• Simplifies the “internal approval” process for client allocations

Once this approval is obtained, allocations are hardcoded into portfolio algorithms, and capital continues to flow in through periodic automatic rebalancing, rather than market timing judgments.

This mechanical buying pressure allows XRP ETP to continue absorbing capital even if prices decline and social sentiment worsens.

Supply Compression: The Formation of a “Spring-loaded” Market Structure

An even more intriguing phenomenon is the rapid compression of circulating supply associated with expanding ETP holdings.

When new ETP/ETF issues new shares to meet demand, authorized participants must procure XRP and deliver it to custodians. These tokens are stored in wallets and disappear from the public exchange order books.

Latest on-chain and exchange data suggest that, despite increasing ETP holdings, XRP balances on centralized exchanges are trending downward toward year-end.

This creates a “spring-like” market structure:

Scenario: In January, if discretionary trading increases or macro conditions shift toward risk-on,

→ New buyers will face a much thinner liquidity layer rather than the abundant supply layer of the past

→ Even a slight increase in demand could push prices more sharply than during periods of ample supply

“Extreme Pessimism” in Sentiment: A Potential Signal for Rebound

At the same time, public sentiment indicators are reaching warning levels.

Analytics firm Santiment’s analysis shows that recent negative comments about XRP have significantly outnumbered positive mentions over the past few weeks. This reflects strong dissatisfaction among disappointed individual investors with the relative underperformance of the more volatile tokens.

Looking at historical market cycles, such extreme sentiment (not guaranteed) can precede sharp contrarian rebounds.

Market “Contradictions” and Future Outlook

Overall, this is not a market lacking coherence but a transitional market:

Positive factors:

• Continued inflow of new institutional capital
• Establishment of new ETP wrappers
• Sustained demand driven by fund hardcoded rebalancing rules
• Ripple’s strategic infrastructure integration

Negative factors:

• Softening price charts
• Extreme disappointment among individual investors
• 15% decline this month
• Pessimistic public sentiment

For XRP in early 2026, the widening gap between “where capital is” and “where prices are traded” may prove more significant than weekly performance. This contradiction could persist until the mechanical capacity of supply compression and institutional absorption surpasses the selling pressure of disappointed individual investors.