XRP Price Weakens Amid ETF Outflows & Declining Open Interest

The fragility of XRP’s recent price action is underscored by a significant retreat of institutional capital. According to data from SoSoValue, Spot XRP ETFs recorded their largest-ever single-day outflow of approximately $53.32 million on Tuesday, January 20. This marks the second outflow since the products launched in November 2025 and follows a previous exit of $40.80 million on January 7. The bulk of the selling pressure originated from Grayscale, with more than $55.39 million leaving its GXRP ETF. While Franklin Templeton’s XRPZ product saw a modest inflow of $2.07 million, it was insufficient to offset the losses, resulting in the net daily outflow. This trend of outflows from issuers like Grayscale, contrasted with zero flows from Canary, Bitwise, and 21 Shares, points to a clear institutional reassessment of XRP’s immediate upside potential.

This institutional pullback coincides with XRP’s failure to sustain momentum above the $2 level. After a brief rally earlier this year, the price has struggled, crashing toward $1.95 last week and consolidating at weakened levels. The correlation is stark: as selling pressure from ETFs mounts, the cryptocurrency’s price stability erodes. The data suggests that the brief price increase was not supported by sustained institutional conviction, leaving XRP vulnerable to further declines if these outflows persist. The slowdown in institutional participation is a critical headwind, directly contributing to the asset’s heightened price volatility and undermining broader market confidence.

Parallel to the institutional exodus, retail and derivatives market activity has plummeted, further compounding XRP’s weakness. Data from Coinglass reveals that futures Open Interest (OI) for XRP crashed to $3.35 billion this Wednesday, marking the lowest level recorded since January 1, 2026, when OI was $3.33 billion. Open Interest represents the total number of outstanding derivative contracts, and a sharp decline typically signals that traders are closing positions and losing interest in the asset’s future price movements. This crash in OI to near-yearly lows indicates a significant reduction in speculative trading activity and retail market participation.

The decline in Open Interest is a powerful sentiment indicator. It suggests that traders, both retail and professional, are becoming increasingly skeptical of XRP’s near-term upside potential and are adopting a more defensive stance. This waning optimism removes a key source of liquidity and buying pressure from the market. When combined with the institutional ETF outflows, the picture that emerges is one of broad-based de-risking across both major investor classes. The market is not merely pausing; it is actively withdrawing capital and reducing exposure, which creates a challenging environment for any price recovery.

The technical outflows and declining Open Interest occur within a macro sentiment backdrop of pronounced anxiety. The crypto Fear and Greed Index has entered extreme fear territory, reflecting a market-wide shift toward a risk-off approach among investors. This pervasive caution is fueled by growing geopolitical and regulatory uncertainties, which are prompting investors to reduce exposure to perceived riskier assets like cryptocurrencies. For XRP, which has its own unique history of regulatory challenges, this broader climate of uncertainty acts as an additional weight, exacerbating the negative impact of its specific fund flow and derivatives data.

The convergence of these factors—record institutional outflows, a crash in retail-driven derivatives interest, and a market-wide sentiment of extreme fear—paints a concerning near-term outlook for XRP. According to CoinMarketCap, XRP has managed a modest 1.62% gain over the past 24 hours as it attempts to recover from recent losses. However, this minor bounce appears fragile against the dominant trends of capital exit and declining engagement. Unless these flows reverse, with ETFs seeing sustained inflows and Open Interest beginning to rebuild, the continued decline in both institutional and retail interest is likely to maintain downward pressure on XRP’s price, keeping it weak and vulnerable to further declines.