XRP enters the new year in a state of tense equilibrium. While its price action appears subdued, a significant shift is occurring beneath the surface: the available supply on exchanges is drying up rapidly. This supply crunch is unfolding against a backdrop of persistent price resistance just below the $2.00 mark and steady institutional demand, setting the stage for a potential volatile breakout.
Exchange Reserves Hit Multi-Year Low
The most compelling narrative for XRP is the dramatic reduction in liquid supply. The amount of XRP held on centralized cryptocurrency exchanges has plummeted to its lowest level since 2018. On-chain analytics reveal that available exchange balances have shrunk from approximately 4 billion tokens to between 1.5 and 1.6 billion over the past twelve months. This represents a decline of roughly 57% since October 2025 alone.
This depletion has critical implications:
* Reduced Selling Pressure: Significantly fewer tokens are readily available for immediate sale on the open market.
* Amplified Volatility: With thinner order books, any surge in buying demand could lead to more pronounced price spikes.
Market researchers interpret this trend as evidence of a long-term holding strategy, with tokens moving into private custody or regulated financial structures. For the spot market, the consequence is a classic setup for heightened price movements in either direction due to constrained liquidity.
Stubborn Resistance Caps Price Advances
Technically, XRP remains trapped. The asset has managed a modest gain to open the year, currently trading at $1.87. This price sits approximately 38% below its 52-week high yet only slightly above its annual low, reflecting a market characterized by indecision rather than bullish conviction.
The primary technical hurdle is the well-defined resistance band between $1.88 and $2.00. This zone has repeatedly halted upward momentum in recent months. Until a decisive close above $2.00 is achieved, XRP is likely to remain confined to a consolidation range, with key support levels identified around $1.82–$1.83 and further down at $1.77.
The Relative Strength Index (RSI) reading of 28.8 indicates oversold conditions, suggesting a technical rebound is possible. However, any recovery attempt must first contend with the established selling pressure just above current prices.
ETF Inflows Provide Structural Demand
On the demand side, spot XRP Exchange-Traded Funds (ETFs) are providing a consistent and measurable pillar of support. These investment vehicles have recorded net inflows for more than 30 consecutive days. A notable $15.55 million flowed in on December 30 alone, bringing the total assets under management across these products to approximately $1.27 billion.
This sustained institutional interest has several effects:
* Constant Buying: ETFs periodically purchase the underlying asset, permanently removing tokens from circulating supply.
* Professional Endorsement: Continuous inflows signal that institutional investors are maintaining exposure despite price fluctuations.
* Market Stabilizer: This steady demand can help absorb selling pressure from other parts of the market.
Should investors sell immediately? Or is it worth buying XRP?
This selective, institution-driven demand exists within a broader cautious climate, as evidenced by a general crypto market Fear & Greed Index score of 28.
Ripple’s Escrow: A Managed Supply Release
Ripple’s scheduled escrow releases continue as planned, with 1 billion XRP (nominally worth about $1.9 billion) unlocked on January 1. Historical patterns, however, significantly temper the net impact of this event.
Typically, 60% to 80% of the tokens released each month are returned to new escrow contracts. In December 2025, roughly 70% were re-locked, meaning the effective net addition to potential liquid supply was only between 300 million and 400 million XRP. If this pattern holds in January, the actual new supply hitting the market will remain limited. Combined with the sharply declining exchange balances, this does not create a scenario of overwhelming surplus.
Technical Indicators Hint at Building Momentum
A review of technical indicators presents a mixed but cautiously optimistic picture:
* Several oscillators are flashing bullish divergences, where momentum improves even as price struggles to break out.
* The Moving Average Convergence Divergence (MACD) is turning upward, signaling building buy-side pressure.
* The current price trades about 7–8% below the 50-day moving average at $2.03, indicating short-term weakness but also room for a mean-reversion rally.
From this setup, two primary scenarios emerge:
Bullish Case:
- A sustained move above $1.88 would be an initial positive signal.
- The focus would then shift to the $1.95 area.
- A daily close above the psychological $2.00 level could trigger momentum buying and pressure short positions.
Bearish Case:
- A drop below the $1.82–$1.83 support zone would bring the $1.77 demand area into view.
- A breakdown below $1.77 would damage the chart structure and open the path to lower support levels.
Conclusion: The Stage is Set for a Volatile Move
In summary, XRP begins 2026 at a fascinating crossroads. A severe contraction in readily tradable supply, underpinned by steady ETF-driven demand and a managed escrow release mechanism, provides a fundamentally tight backdrop. This stands in direct opposition to a formidable technical ceiling just below $2.00 that has repelled all advance attempts. The coming weeks will determine whether this structural supply scarcity possesses enough force to finally shatter the overhead resistance and propel XRP into a new phase of price discovery.
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