XRP at a Crossroads: Institutional Demand Meets Scheduled Supply Releases

As 2026 begins, XRP finds itself in a complex dynamic that extends far beyond simple price action. The cryptocurrency is caught between two powerful forces: the scheduled, multi-billion token release from Ripple's escrow accounts and a notably steady influx of institutional capital via new spot ETFs. The market's trajectory in the coming weeks will likely be determined by how this interplay of fresh supply and long-term demand unfolds.

Providing a counterbalance to supply-side pressures are the spot XRP ETFs, which launched in November 2025. These investment vehicles have rapidly accumulated over $1.25 billion in assets under management, signaling substantial institutional interest.

A particularly notable trend emerged through the end of December: these ETFs recorded net inflows for more than 30 consecutive trading days. This occurred even as the price of XRP retreated significantly from its peaks during the same period. This divergence—falling prices alongside rising ETF holdings—suggests that short-term holders may have been selling, while professional investors used the pullback to establish or increase positions.

From a market perspective, evidence indicates that institutional buyers view prices below $2.00 as an attractive entry and accumulation zone. So far, the recurring escrow releases have not deterred this cohort of investors.

The Monthly Escrow Release: A Filtered Supply Wave

Kicking off the new year, 1 billion XRP is scheduled for release from Ripple's escrow accounts on the first calendar day, as it is every month. Nominally, this represents a substantial injection of new supply. However, historical patterns show the impact on actually available tokens is often muted.

Data reveals that Ripple typically returns 60% to 80% of the unlocked tokens back to escrow shortly after release. In December 2025, for instance, approximately 700 million XRP were re-locked. Consequently, the circulating supply increases at a much slower pace than the gross unlock value would imply.

Nevertheless, short-term attention is focused on this new liquidity, especially with market sentiment remaining fragile following the Q4 2025 correction. Participants are watching closely to see if the market readily absorbs these tokens or if additional selling pressure materializes.

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

Price Action and Technical Backdrop

Following a significant correction from its October 2025 highs, XRP has recently consolidated within a narrow range. The asset currently trades around $1.84, well below its 52-week high of $3.04. It is hovering just above its recent annual low and roughly 10% below its 50-day moving average, indicating persistent downward pressure since December.

The 14-day Relative Strength Index (RSI) sits at 28.8, placing it in oversold territory. This suggests selling pressure may be overextended in the near term, though it does not guarantee an imminent trend reversal. Meanwhile, the annualized 30-day volatility stands at a moderate 34%. Compared to the cryptocurrency's historically extreme swings, the current environment appears characterized by a wait-and-see approach rather than frenetic speculation.

On-Chain Metrics Point to Tighter Liquidity

Blockchain data supports the thesis of a structural reduction in readily available supply:

• Exchange Balances: The amount of XRP held on centralized exchanges has dropped from roughly 4 billion to under 1.5 billion tokens over twelve months. Fewer coins on trading platforms generally translates to less immediate sell-side pressure.
• Whale Concentration: A smaller group of fewer than 500 wallets now holds a significant portion of the total supply. While this raises questions about decentralization, it also demonstrates the strong conviction of large addresses, which appear to be holding rather than actively trading their stakes.
• Network Development: The XRPL EVM Sidechain, introduced in 2025, continues to see steady developer activity. This expands the network's utility beyond pure payments into DeFi and smart contract applications—a potentially crucial factor for long-term XRP demand.

Regulatory Outlook: Awaiting Clarity from Washington

With the SEC case concluded in August 2025, the regulatory focus has shifted from individual litigation toward establishing institutional frameworks. The center of attention is currently the proposed CLARITY Act, which is expected to enter its next round of deliberations in the U.S. Senate in January.

This legislation aims to create clear guidelines for banks and financial institutions engaging with digital assets. For XRP, a legally sound foundation for direct bank custody solutions would be particularly significant. Success here could further cement XRP's role within the traditional financial system and open additional demand channels from institutional investors.

Conclusion: A Pivotal Opening to the Year

XRP enters Q1 2026 with a mixed setup: technically weakened, displaying oversold signals, and far from its yearly high, yet fundamentally supported by declining exchange reserves, active network development, and persistent ETF inflows. The market's direction in the coming weeks will hinge significantly on whether the institutional demand and constrained on-exchange liquidity can absorb today's 1-billion-token escrow release—and what additional momentum the CLARITY Act may provide as the month progresses.