Is XRP about to break through? The logic behind the ETF absorbing 1% of circulating supply and the 60% upward probability

XRP’s recent performance is quite interesting. On one hand, ETF capital continues to flow in net, absorbing nearly 1% of the circulating supply in just over a month; on the other hand, technical support has formed, and market sentiment is also shifting. Several analysts believe that these structural changes are laying the groundwork for a potential upward breakout for XRP in 2026. Currently priced at $2.15, with a 7-day increase of 14.30%, but the real focus is not on short-term fluctuations, rather on the deep structural changes in capital and supply-demand.

ETF Capital’s “Vampire Effect”

From a capital perspective, spot ETFs linked to XRP have become the behind-the-scenes driver of this rally. According to the latest data, since mid-November 2025, XRP-related ETFs have continuously recorded net capital inflows, absorbing nearly 1% of the circulating supply in just over a month—this figure may seem small, but in the crypto market, it represents a significant structural shift.

Scale is rapidly expanding

Looking at recent performance alone, XRP spot ETFs recorded a single-day net inflow of $13.59 million on January 2. Among them, Franklin XRP ETF (XRPZ) was the most active, with a single-day net inflow of $9.72 million, bringing total net inflows to $243 million.

More importantly, if we project based on the current inflow rate, experts predict that by mid-2026, ETF assets could reach $5 billion, at which point nearly 2.6 billion XRP will exit circulation. What does this mean? It means the tradable supply of XRP in the market will further tighten, significantly easing selling pressure.

Institutional Capital Participation Upgrades

Commentator John Squire observed that XRP experienced a surge in trading volume in a very short period, indicating not only retail participation but also the entry of some large funds. This resonance of different sizes of capital often signals a turning point in market sentiment.

Technical Outlook: Support Stable, 60% Breakout Probability

From a technical perspective, XRP’s trend is shifting from a “downward channel” to a “controlled correction.” Technical analyst EGRAG CRYPTO pointed out that on the five-day chart, XRP is still operating within a clear downtrend channel, but the current correction appears more like a buildup rather than distribution.

Key Support Level Has Stabilized

Latest data shows XRP has rebounded above the key support level of $1.88, and holding above this level is very important. If the price can stay above the 21-period exponential moving average and effectively break through the resistance near the channel’s upper boundary, the probability of an upward breakout is about 60%.

Short-term technical indicators show divergence

However, short-term indicators still show divergence. On one hand, the buy-sell ratio has risen to a nearly one-month high, indicating selling pressure has eased; on the other hand, some analysts point out that large-volume candlesticks recently appearing may mean there is still strong selling at resistance levels. This reminds investors that a breakout is not guaranteed to happen overnight and requires observing subsequent volume confirmation.

Market Environment Improving, Institutions Rebalancing

The overall crypto market environment is also improving, providing important external support for XRP.

Sentiment Indicator Rebounds

The crypto fear index has risen from “extreme fear” to 28, indicating market psychology is recovering. When the fear index drops below 25, the market is in “extreme fear,” often a bottom zone; now that it has risen to 28, it suggests investor panic is easing, and funds are willing to enter.

BTC Stabilization Drives the Whole Market

Bitcoin, after a deep correction at the end of last year, re-established above $90,000 in early January, breaking through $93,000. This psychological milestone’s re-establishment has had a positive effect on the entire market. Assets like Ethereum and XRP also rebounded slightly, with institutional funds beginning to rebalance for the new fiscal year.

Deep Changes in Supply-Demand Structure

From a macro perspective, XRP’s supply-demand structure is undergoing profound changes.

In 2025, exchange balances decreased by 58%, indicating a large amount of XRP is flowing out of exchanges, which usually signals growing confidence among holders. Coupled with ETF continuous absorption of circulating supply, the actual tradable XRP in the market is decreasing. This tightening on the supply side, combined with improved demand (ETF net inflows, institutional participation), provides substantial support for the price.

Summary

XRP is currently in a situation that is quite meaningful: continuous ETF capital inflows are changing the supply-demand structure, technical support is clear, market sentiment is shifting, and institutional participation is increasing. These factors together are indeed laying the foundation for a potential upward breakout in 2026.

But it’s important to note that a 60% breakout probability does not guarantee success. In the short term, if overall crypto market sentiment weakens or selling pressure near resistance levels is too strong, XRP could face a phase of correction. For investors watching XRP, the current moment may be a critical trend decision point—pay attention to whether the price can effectively break through the $2.30-$2.40 resistance zone and whether subsequent ETF inflows can maintain the current pace.