The recent introduction of the first XRP spot ETF on Nasdaq generated considerable anticipation within the cryptocurrency community. However, instead of the expected price surge, XRP experienced a decline of approximately 8%, leaving many investors puzzled. The initial enthusiasm surrounding the ETF did not translate into a price increase, as many had hoped.
On its launch day, the ETF attracted around $245 million in inflows and saw nearly $60 million in trading volume. While these numbers set a record for a new XRP product, they represented less than 1% of XRP“s total market capitalization, which is about $138 billion. This indicates that the influx of capital was insufficient to create significant demand pressure, resulting in a price drop as traders took profits and the initial excitement faded.
It was a common assumption that the ETF inflows would lead to a direct removal of XRP from exchanges. However, the current market structure suggests that inflows do not necessarily equate to immediate spot buying, which is crucial for driving prices upward. Analysts have indicated that for a substantial price breakout, XRP may require inflows that are ten to fifteen times larger, estimating the need for between $3 billion to $5 billion in a single day.
Liquidity levels also played a role in the price movement. Data from major exchanges revealed that approximately 2.4 billion XRP tokens are liquid and available for trading, amounting to roughly $5 billion in value. Additionally, over-the-counter (OTC) desks reportedly hold between $5 billion and $12 billion in deep liquidity. Institutions that buy from OTC desks often pay a premium of 5% to 15% to prevent impacting the spot market price, which, while beneficial for long-term supply reduction, does not have an immediate effect on exchange prices.
For XRP to achieve a breakout, technical analysis indicates a bullish divergence forming on the Relative Strength Index (RSI), suggesting a potential trend reversal. However, a confirmed breakout is contingent on achieving daily closes above $2.68. Analysts believe that to reach this level of demand, multiple ETFs would need to launch simultaneously, potentially creating the necessary market conditions.
Experts contend that inflows of $1 billion to $3 billion in a single day could push XRP upwards by 40 to 50 cents, while inflows exceeding $5 billion might spark a more pronounced rally.
