XRP ETFs Are Gobbling Supply — $1B Institutional Inflows Stoke a Market Squeeze

ETF frenzy: who’s buying and why it matters

If you thought crypto money moved fast, meet XRP ETFs — they’ve been hoovering up supply like it’s the last slice of pizza at a party. XRP has sprinted ahead of the other top coins this year, shooting up roughly 28% to about $2.37 and hitting levels we haven’t seen since late 2025. That jump isn’t just retail FOMO; fancy regulated funds in the U.S. have been steadily piling in since the ETFs launched in November and pushed cumulative inflows above the $1 billion mark.

The pace is notable: the new year alone saw roughly $60 million flow into these products in just a couple of trading days. Institutional allocators aren’t poking the water — they’re building positions. To put it in perspective, investment into XRP products climbed from a few hundred million in 2024 to multiple billions in 2025, and the early 2026 action suggests appetite is still accelerating.

What the buying spree actually does to the market

Here’s the fun part: as ETFs and big players scoop up tokens, fewer XRP remain on centralized exchanges. That creates a classic supply squeeze — less inventory on order books means any fresh demand can move price more easily. Meanwhile, activity on the XRP ledger’s decentralized exchange has boomed, with order-book liquidity and transaction counts rising sharply. In plain English: there’s capital showing up and it’s actually being used, not just parked.

The trade mechanics reinforce the move. A recent breakout came after a technical squeeze that knocked out about $5.8 million in short positions — forced buybacks that turbocharged the rally past key psychological levels. A higher-than-usual taker-buy ratio also signals buyers aggressively hitting asks rather than passively waiting, which is a tell that momentum is real, not just chatter.

Derivatives tell a similar story. Futures open interest is at multi-month highs and derivatives volume has surged into the billions, which means hedgers and big traders are showing up in force. On the institutional side, the ecosystem has also been getting a makeover: custody, prime brokerage and treasury-focused acquisitions have made it easier for enterprises to test on-chain settlement and custody workflows. That infrastructure upgrade removes a lot of friction and makes blocky institutional allocations feel less scary.

So what’s the takeaway? ETFs are acting like a vacuum cleaner for supply while market makers and institutional liquidity are building deeper books. That creates an environment where big trades can happen without blowing up the price one way or the other — until they don’t. Keep an eye on ETF flows, exchange balances, and derivatives open interest; those are the knobs that will tell you whether this party keeps dancing or runs out of snacks.