XRP Attempts a Rebound Amid Institutional Caution and Regulatory Delays

After a challenging week of consecutive declines, XRP managed to post gains on Thursday. The digital asset climbed approximately 2.5% to trade near $1.96, breaking a seven-day losing streak. This upward move aligned with a broader cryptocurrency market recovery, partly fueled by conciliatory signals from U.S. President Trump regarding trade tensions with the European Union. However, analysts caution that this short-term price improvement masks underlying structural pressures, including significant ETF outflows, diminished speculative activity, and stalled legislative progress.

Regulatory Progress Faces Potential Setbacks

The regulatory landscape remains the primary fundamental driver for XRP’s valuation. On January 22, the U.S. Senate Committee on Agriculture released a revised draft of a crypto market structure bill. The legislation aims to expand the Commodity Futures Trading Commission’s (CFTC) authority over digital assets and could classify certain cryptocurrencies, potentially including XRP, as digital commodities.

While Ripple CEO Brad Garlinghouse has endorsed the draft as “imperfect but necessary,” the path forward is uncertain. Reports from Bloomberg suggest the Senate Banking Committee may delay its review until late February or March to prioritize housing legislation. The industry itself is divided; Coinbase withdrew its support for the bill due to provisions related to stablecoins, creating a lack of unified backing. A hearing in the Agriculture Committee is scheduled for the week beginning January 27. Market reaction to these developments will be critical in determining whether XRP can sustainably reclaim price levels above $2.

Institutional Investors Signal Hesitation Through ETF Outflows

A notable divergence emerged as the spot price rose: institutional investors appeared to be pulling back. Data from SoSoValue reveals that U.S. spot XRP ETFs experienced their largest daily outflows since inception on January 20 and 21, with a combined $53.32 million leaving the products. The Grayscale XRP ETF (GXRP) led this trend, seeing over $55 million in withdrawals. Franklin Templeton’s XRPZ fund was a rare exception, attracting a modest inflow of $2.07 million.

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

Total assets under management for XRP investment products now stand at approximately $1.34 billion. The contrast between rising prices and falling ETF inflows suggests that the recent price movement is likely being driven by retail buyers or broader macroeconomic factors rather than fresh institutional capital.

Futures Market Resets as Technical Picture Forms

The derivatives market has undergone a significant reset. Open interest for XRP futures contracts has declined to $3.35 billion, marking its lowest point since the start of the year. This followed the liquidation of long positions worth more than $40 million. Such a reduction in leverage often precedes periods of lower volatility or potential trend reversals.

From a technical analysis perspective, XRP is currently trading between immediate support around $1.90 and a key resistance level at the 50-day moving average near $2.05. Reclaiming this moving average is viewed as a crucial next step for the bulls, with the subsequent major resistance zone located around $2.30.