As the XRP price struggled to maintain the $2 level and fluctuated in the upper $1 range, the market responded with, "Why is the price so weak despite the continued positive momentum from institutions?" However, interpreting recent trends from a structural perspective rather than a simple positive or negative one is more persuasive. The key point is that funds flowing into spot ETFs are moving XRP out of exchanges, creating conditions where short-term price movements can become more sensitive.
Due to the structure of spot ETFs, when funds are inflowed, the underlying asset is secured and stored in a custodian. The XRP purchased during this process becomes a "storage volume," distinct from the volume circulating on exchange order books. As the market perceives a decline in tradable volume, the order book (depth) becomes shallow, and in the short term, even relatively small buys and sells can cause price fluctuations. The recent weak collapse of support levels is also being analyzed as being consistent with an environment where prices can fall even without major negative factors.
However, this trend doesn't necessarily imply an immediate "upward" or "downward" trend. While ETFs absorbing volume is itself a form of demand, short-term prices are still heavily influenced by exchange liquidity, derivatives positions, and psychological factors. In other words, a discrepancy can arise, where long-term demand builds while short-term prices appear weak.
Another variable is the maturity of the arbitrage mechanism that closely aligns ETF prices with exchange spot prices. In mature ETF markets, professional participants bridge price gaps and provide liquidity. However, some argue that in newer markets, there may be a lag before this link is sufficiently strong, preventing ETF demand from immediately translating into stable exchange prices.
Ultimately, XRP's current situation is more a transitional phase, with the center of gravity shifting rather than a "good news being nullified." When spot ETFs absorb some of the market's circulating supply and exchange liquidity is dispersed, the price may appear unstable. Conversely, as the ETF market grows and price-linked structures become more sophisticated, short-term volatility may ease, shifting the center of price formation toward regulated products.
The analysis that XRP's short-term fluctuations should not be viewed solely as a "lack of demand," but rather as a result of the movement of volume and liquidity reorganization caused by ETFs is gaining traction.
