Institutional Investors Accumulate XRP Amid Market Volatility

While the price of XRP experienced fluctuations over the weekend, a significant underlying trend has captured market attention: substantial accumulation by institutional players. This activity persists even as the asset trades well below its summer highs.

On Saturday, XRP was trading at $1.91, marking a 5.6% recovery from its weekly low of $1.77. This upward move was partly triggered by monetary policy developments in Japan. The Bank of Japan raised interest rates to 0.75% but simultaneously signaled its commitment to maintaining an accommodative policy stance. This reassurance calmed investor fears of a stronger yen triggering capital outflows from risk assets, including cryptocurrencies.

ETF Flows Tell a Stark Story

The divergence between price performance and institutional interest is particularly evident in exchange-traded fund (ETF) data. On December 19th, U.S.-based XRP ETFs recorded inflows of $13.21 million. This marked the 24th consecutive day of net positive inflows for these products. Since their launch, these ETFs have gathered between $1.07 billion and $1.14 billion in assets.

The mechanics of ETF creation help explain why these substantial inflows don't always create immediate upward price pressure. ETF managers typically purchase the underlying tokens after market close or through settlement processes that do not directly impact public order books.

The institutional preference for XRP was especially pronounced on December 18th. While Bitcoin and Ethereum ETFs saw outflows of $161 million and $97 million respectively, XRP-focused products attracted approximately $30 million in new capital. This robust demand continues despite XRP being in a correction of roughly 45% from its July peak.

Should investors sell immediately? Or is it worth buying XRP?

On-Chain Data Points to Supply Squeeze

A compelling narrative is forming on the blockchain. On-chain metrics indicate a tightening supply landscape. Over the past 60 days, the amount of XRP held on exchanges has plummeted from 3.95 billion tokens to 2.6 billion—a striking 45% reduction. This migration of tokens from trading platforms to private wallets is commonly interpreted as a sign of long-term holding intentions.

Concurrently, the network has seen growth in active wallets, which now number 7.41 million. Ripple, the company closely associated with XRP, is also expanding its infrastructure. Its $1.25 billion acquisition of Hidden Road is aimed at bolstering its prime brokerage services. On December 19th, CEO Brad Garlinghouse addressed allegations of price manipulation, pointing to the asset's substantial daily trading volume of $3.2 billion as evidence of a mature and liquid market.

Technical Outlook and Price Targets

From a technical analysis perspective, traders are watching key levels. In the short term, a significant resistance zone sits at the 50-day moving average, currently around $2.15. Market analysts suggest that if support at $1.80 holds firm, price targets near $2.50 could be achievable within the next four to eight weeks. A decisive break below $1.80, however, could see a retest of the recent $1.77 low.

The prevailing market thesis centers on the combination of persistent institutional inflows and a shrinking available supply on exchanges. This dynamic suggests the market may be in an accumulation phase, even as the spot price remains under pressure. The sustained buying from large-scale investors provides a counter-narrative to the recent bearish price action, setting the stage for a potential supply-driven price move once accumulation subsides.