XRP ETFs hit all-time highs: Why is XRP price plummeting?

XRP: $60 Million in Assets Under Management but a Price in Free Fall

On December 17, exchange-traded funds exposed to XRP crossed the $60 million assets under management threshold. A milestone that should theoretically support the price, but the reality of the market tells a completely different story. XRP was trading around $1.79 at the time of the announcement, posting a decline of over 4% on the day.

This disconnect between institutional inflows and price performance is puzzling the crypto community. Many retail investors expected to see the price react positively to these capital inflows, replicating the pattern observed with the Bitcoin ETFs launched in early 2024. But the underlying mechanisms of crypto ETFs operate differently from what the collective imagination supposes.

The very structure of index funds introduces a significant time lag between retail investors purchasing ETF shares and the actual buying of the underlying asset on the spot market. This latency largely explains why the $60 million does not immediately translate into visible buying pressure on XRP.

The Lesser-Known Behind-the-Scenes Workings of Crypto ETFs

Chad Steingraber, an industry expert, shed light on this apparent paradox. ETFs do not directly trade XRP during market hours. Investors buy and sell fund shares, exactly like traditional stocks, during the operating hours of regulated exchanges.

It is only after market close that managers calculate the net inflows or outflows. They then proceed with the purchases or sales of XRP necessary to maintain alignment between the fund’s net asset value and the shares issued. This process mechanically creates a delay between investor enthusiasm for the ETF and the actual impact on the spot price.

Institutions also follow long and methodical approval cycles before allocating capital. These processes include comprehensive due diligence, risk analyses, and multiple validations that can extend over several months. Institutional adoption therefore does not generate an instant pump, unlike retail speculative movements that react in real time to news.

A Technical Configuration That Worries Chartists

Beyond the structural aspects of ETFs, technical analysis of XRP reveals persistent fragility. The cryptocurrency is currently testing a critical support zone located between $1.80 and $1.90, which has held on multiple occasions over the past twelve months.

Analysts are closely monitoring the $1.80 level. A confirmed break below this threshold would invalidate the support structure and pave the way for further declines. The next major support is located around $1.60, then in a wider range between $1.30 and $1.40 if selling pressure intensifies.

The underlying trend remains bearish on higher timeframes, with signs of weakness detected for several months. Technical bounces observed occasionally have failed to reverse this structural dynamic. Market sentiment remains cautious despite the positive institutional developments surrounding ETFs.

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