Ripple’s strategic moves set XRP apart in a challenging market

Bitcoin, Ethereum, and XRP have all retreated to deep cycle lows, dragging the broader crypto market back to valuation levels not seen since late 2024, according to CryptoSlate’s data.

While price action across the board appears uniformly grim, with BTC heading below $70,000 and XRP recently trading around $1.35, sentiment toward the Ripple-linked token is noticeably less pessimistic than that surrounding the two largest cryptocurrencies.

That relative optimism is not derived from immediate spot price performance, as XRP has reached its lowest price since November 2024, but rather from a cluster of near-term, adjacent ecosystems catalysts that traders can trade around.

With BTC and ETH behaving like high-beta macro assets tied to liquidity conditions, XRP is increasingly trading on idiosyncratic optionality linked to market structure upgrades and institutional access.

Institutional flows diverge as ETFs reprice risk

The most direct measure of this bifurcated market optimism is found in capital allocation, specifically through regulated exchange-traded funds.

Bitcoin has been losing institutional demand since early 2026 as macroeconomic stress intensifies.

Data from SoSo Value show that US spot BTC ETFs have recorded three consecutive months of outflows, with more than $1.6 billion in January, following outflows of around $5 billion in late December.

Notably, this streak has continued into this month, with the 12 products already recording outflows of around $255 million.

These outflows highlight a structural vulnerability for Bitcoin during liquidity crunches. As the premier macro hedge inside portfolios, it is often the first asset large allocators trim when tightening conditions force a retreat to cash.

Notably, the same outflow streaks are evident in Ethereum-focused products in the market. The ETF funds have seen net outflows of more than $2.4 billion since last November.

In sharp contrast, XRP is displaying the opposite pattern within the same investment vehicles.

XRP ETFs, which launched in November, have attracted approximately $1.3 billion in inflows and have recorded less than five days of net outflows since their debut.

During that same period, Bitcoin and Ethereum ETFs experienced net selling.

This suggests that while Bitcoin is treated as a source of liquidity, XRP is behaving like an incremental allocation, with investors adding exposure precisely because the asset has become easier to buy, hold, and hedge through familiar, regulated wrappers.

Ripple’s ecosystem upgrades target institutional DeFi

Beyond flow dynamics, the optimism surrounding XRP is anchored in tangible infrastructure developments that aim to bridge traditional finance and on-chain liquidity.

On Feb. 4, Ripple announced that Ripple Prime now supports Hyperliquid, positioning the integration as a way for institutional clients to access on-chain derivatives liquidity through a prime-broker-style interface.

The release emphasizes consolidated access alongside margin and risk management, which are features that make decentralized finance venues legible to institutions accustomed to traditional prime workflows.

While this integration does not automatically create spot demand for the token, it reinforces a broader market perception that Ripple is aligning its institutional stack with on-chain venues just as market structure conversations push activity toward compliance-friendly rails.

This development coincides with the activation of “Permissioned Domains” on the XRP Ledger (XRPL) mainnet.

RippleXDev confirmed that these domains are now live, marking a major milestone for the network.

XRPL’s documentation defines Permissioned Domains as controlled environments that can restrict access to features such as Permissioned Decentralized Exchanges through credentialing.

This represents a direct attempt to reconcile on-chain trading with real-world compliance requirements, effectively creating a “KYC layer” that allows regulated entities to participate on-chain without assuming blind counterparty risk.

Derivatives markets signal leverage washout and defensive positioning

The internal mechanics of the derivatives market further explain why sentiment for Bitcoin and ETH remains “extremely bearish” while XRP traders position for upside.

For Ethereum, on-chain data reveals a significant shift in market sentiment.

The Ethereum Coinbase Premium Index (a 30-day moving average) has plunged to its lowest level since July 2022, according to CryptoQuant data.

This index measures the price gap between the ETH/USD pair on Coinbase Pro, often a proxy for US institutional demand, and the ETH/USDT pair on Binance.

A deeply negative premium indicates that selling pressure is coming primarily from U.S. entities aggressively de-risking their positions.

Simultaneously, the market has seen a massive BTC leverage flush. CoinGlass data show Bitcoin investors have been liquidated for more than $3 billion in recent days amid the price slump.

Conversely, XRP derivatives hint at a cleaner market structure and asymmetric expectations. Data from CryptoQuant show that Open Interest for XRP on Binance has dropped significantly to $405.9 million, marking the lowest level since November 2024.

This plunge in Open Interest acts as a market reset, indicating that speculative froth has evaporated, which often serves as a prerequisite for a sustainable trend reversal.

Furthermore, XRP options open interest is heavily skewed to calls, with calls representing 86.87% and puts 13.13%. This skew suggests that while spot prices remain weak, traders are using options to seek upside exposure without catching a falling knife in the spot market.

Regulatory clarity and future market structure

Meanwhile, the structural optimism for XRP is also buoyed by a repricing of regulatory risk, a factor that previously defined the asset’s discount.

In August 2025, the SEC announced a joint stipulation dismissing appeals and resolving the civil enforcement action against Ripple, noting that the district court’s judgment would remain in effect.

This resolution has allowed the narrative surrounding Ripple and XRP to shift from litigation to financial plumbing.

Since then, the products have gained access to the CME Group, and Ripple has embarked on an acquisition spree to further embed its products within the traditional financial system.

Additionally, the rollout of Ripple’s stablecoin, RLUSD, which is one of the fastest-growing stablecoins in the market, with a supply of over $1.4 billion, also supports the narrative of XRP serving as a settlement rail.

Moreover, the upcoming Permissioned DEX features on the XRPL are expected to provide the regulatory certainty needed for institutional adoption.

What does the future hold for XRP?

Market analysts are now modeling three specific scenarios for how these divergent narratives will resolve over the coming months.

In the base case, risk assets stabilize, and XRP maintains a relative “catalyst premium” over the broader market.

Early adoption of XRPL’s permissioned domains and DEX could help bridge liquidity between open and permissioned venues, sustaining the narrative even without a massive volume spike.

The bull case envisions the permissioned stack becoming the primary regulated on-chain venue for a subset of institutions, such as those dealing in tokenized real-world assets or cross-border settlement flows.

If Ripple Prime’s connectivity supports this migration, XRP could experience a market-structure re-rating where regulated on-chain order books command a higher valuation multiple than standard altcoin beta.

However, a bear case remains if macro conditions remain tight and ETF outflows continue to punish the complex. If permissioned infrastructure ships but adoption lags, liquidity could fragment, turning “compliance DeFi” into a second-half 2026 story rather than a first-quarter catalyst.

For now, the data indicates a clear split. Bitcoin and Ethereum are struggling under the weight of macro liquidity and defensive hedging, while XRP is being repriced by the possibility that the next phase of crypto market structure will be defined by permissioned, credentialed, and institution-ready rails.