US XRP spot ETF market stabilizes after outflow plunge
Market sentiment has been a bit shaky due to legislative news surrounding crypto, but the U.S. XRP Spot ETF saw a quick turnaround in demand following a drop in outflows on January 7th.
On January 8 and 9, the XRP Spot ETF issuer reported inflows of $8.72 million and $4.93 million, respectively. This marked the ninth week in a row of inflows.
However, the 21Shares XRP ETF (TOXR) has been somewhat of a drag, with net outflows of $7.77 million since its launch. This situation highlights the significance of being first to market. The Canary XRP ETF (XRPC), recognized as the first pure-play U.S. XRP spot ETF, stands out with total net inflows of $393.66 million since its debut, outperforming Bitwise, Grayscale, and Franklin Templeton’s ETFs.
The underperformance of the 21Shares XRP ETF could catch the eye of other ETF issuers, possibly delaying new XRP spot ETF applications. This week, WisdomTree retracted its S-1 form for the XRP Spot ETF, while Morgan Stanley has submitted an S-1 form for its BTC Spot and SOL Spot ETFs, with some speculating it as an “XRP Snub.”
Despite the mixed signals from ETF developments, the strong interest in the XRP Spot ETF supports a cautiously optimistic price outlook for XRP, at least in the short term.
The US XRP spot ETF market has experienced total net inflows of $1.22 billion since it began on November 14. In comparison, the US SOL Spot ETF market has garnered net inflows of $816.92 million since its October launch. Conversely, the US BTC spot ETF market has faced net outflows of $2.69 billion since the launch of XRPC.
This disparity in the XRP spot ETF market is stirring talks about its potential separation from Bitcoin and the wider market trends.
XRP’s bullish outlook remains solid
Ongoing strong demand for the XRP spot ETF, along with progress on the market structure bill, encourages a cautiously optimistic outlook for the short term (1-4 weeks) with a target price of $2.5.
On top of that, increasing real-world use cases, expectations for rate cuts from the Fed, and a belief that the Senate will eventually endorse the market structure bill contribute to longer-term positive price expectations.
- Mid-term (4-8 weeks): $3.0.
- Long-term (8-12 weeks): $3.66.
Key risks undermine bullish outlook
Several factors could disrupt this positive outlook, including:
- The Bank of Japan recently hinted at a more aggressive interest rate stance, with potential hikes, which might lead to a pullback in currency trades and negatively affect short-term expectations.
- Indicators from the U.S. economy and the Federal Reserve have dampened hopes for an interest rate cut in March.
- Partisan opposition could hinder progress on the market structure bill.
- There are concerns about leaked reports regarding the XRP Spot ETF.
If these risks materialize, we might see XRP dip below $2, signaling a possible reversal in the bullish trend.
Technical picture: caution near key moving averages
XRP’s price dropped 1.37% on January 9, closing at $2.0926, following a 2.01% fall the day before. This decline has placed more selling pressure on XRP compared to the general crypto market, which was down 0.49%.
This marked the fourth consecutive day of losses, pushing XRP trading below the 200-day EMA while still remaining above the 50-day EMA. Although the overall fundamentals appear bullish, the EMAs indicate short-term positivity but hint at a longer-term bearish outlook.
Key technical levels to monitor include:
- Support levels: $2.0, $1.75, and $1.50.
- 50-day EMA support: $2.0723.
- 200-day EMA resistance: $2.3384.
- Resistance levels: $2.5, $3.0, and $3.66.
From the daily chart perspective, if XRP breaks above $2.2, it could signal a pathway toward the 200-day EMA. Sustained movement above that level might indicate a bullish trend reversal, paving the way to test the $2.5 resistance point.
Moreover, holding above the 200-day EMA would reinforce the bullish outlook for both the medium term and the longer-term price target of $3.66.
