XRP spot ETFs have demonstrated a remarkable ability to attract capital, recording approximately $756 million in inflows over eleven consecutive trading days since their debut on November 13. This surge in ETF demand starkly contrasts with XRP's declining price, which has dropped about 20% during the same timeframe, now hovering around $2.03. This discrepancy has sparked curiosity about the evolving ownership structure of XRP. The strong inflow into ETFs amid declining prices suggests a market balancing between consistent institutional investment and a broader reduction in risk exposure. Essentially, this scenario signifies a complex interplay where new, regulated demand is entering the market while current holders reassess their positions.
XRP's ETF inflows are particularly noteworthy against a backdrop of net outflows in other cryptocurrencies. Bitcoin ETFs experienced over $2 billion in redemptions, and Ethereum products saw nearly $1 billion in withdrawals. Meanwhile, even high-performing assets like Solana managed to garner only about $200 million in cumulative inflows, with other altcoin ETFs such as Dogecoin, Litecoin, and Hedera attracting between $2 million and $10 million each. XRP, however, stands out with its consistent accumulation, and the four ETFs now account for approximately 0.6% of XRP's total market capitalization.
Market participants attribute this demand to the operational efficiency of XRP ETFs, which provide institutional investors with a compliant, low-friction avenue into the asset, avoiding the complexities of direct token custody and exchange risks. However, the lack of upward price momentum despite these inflows indicates that other market sectors may be reducing their exposure or managing risks in light of macroeconomic and crypto-specific uncertainties. This phenomenon, while not new in the crypto world, is significant in scale. The selling pressure likely stems from early adopters cashing out after enduring years of volatility and possible treasury adjustments. The ETF boom has effectively created a liquidity bridge, enabling large entities to offload positions without causing immediate market disruption.
Beneath the surface, ownership data suggests a shift towards centralization, as evidenced by a 20.6% drop in the number of "whale" and "shark" wallets holding at least 100 million XRP over the past eight weeks, according to blockchain analysis firm Santiment. This pattern of fewer large wallets holding more combined assets can be seen as "consolidation," with supply moving into "stronger hands." However, from a risk-adjusted perspective, it indicates an increasing centralization risk. With nearly half of the available supply concentrated in a diminishing group of entities, the market's liquidity profile is becoming more precarious. Should this group decide to distribute, the resulting liquidity shock could be substantial. Concurrently, spot exchange balances are depleting as tokens transition into the regulated custody solutions mandated by ETF issuers. Although this theoretically reduces the "float" available for retail trading, it hasn't caused a supply shock yet. Instead, the transfer from exchanges to custodians appears to be a one-way flow, absorbing the circulating supply released by the declining whale cohort.
The ongoing inflow streak has sparked discussions about which asset might become the benchmark altcoin for institutional portfolios. Traditionally, regulated crypto exposure has focused almost exclusively on Bitcoin and Ethereum, with other cryptocurrencies receiving minimal attention. XRP’s recent inflow activity, surpassing the cumulative inflows of other altcoin ETFs, has temporarily altered this dynamic. Part of the interest is driven by developments at Ripple, including its licensing expansion in Singapore and the adoption of its dollar-backed stablecoin, RLUSD, which provide institutions with a broader ecosystem to consider. Ripple’s acquisitions in custody, brokerage, and treasury management have established a vertically integrated framework reminiscent of traditional financial infrastructure, offering a foundation for regulated participation.
Despite this, analysts caution that a short inflow streak does not establish a new long-term benchmark. XRP will need to maintain demand across various market conditions to uphold its position relative to competitors like Solana, which has gained attention for its increasing tokenization activity, and other assets that might attract larger inflows once new ETFs are introduced. For now, XRP's performance within the ETF sphere indicates early momentum rather than structural dominance. The inflows reflect genuine institutional interest, but the asset's price behavior underscores the broader challenges faced by large-cap cryptocurrencies amidst macroeconomic uncertainties.