XRP Has the Best Fundamentals in Crypto — Here’s Why the Price Keeps Falling Anyway

Regulatory clarity, institutional adoption, record ETF inflows and real-world utility — XRP has it all. So why is it down 50% from its highs while analysts predict $8?

Quick Answer: Why is XRP price so low despite adoption?** XRP is underperforming despite strong fundamentals due to four structural forces: post-SEC settlement profit-taking by early holders, monthly escrow releases adding 300 million tokens to circulation, capital rotation toward Bitcoin and AI narratives, and a utility model that doesn’t require holding the token long-term. The gap between bullish predictions and bearish price action reflects a market waiting for catalysts to align.

The XRP Paradox

Something doesn’t add up with XRP.

The token has regulatory clarity after years of SEC litigation. It has $1.37 billion in ETF inflows since November 2025 — the second-fastest crypto ETF to cross the billion-dollar mark after Bitcoin. It has real utility powering cross-border payments through Ripple’s On-Demand Liquidity network. Exchange balances sit at eight-year lows, suggesting holders aren’t selling.

And yet XRP trades around $1.90, roughly 50% below its July 2025 high of $3.65.

Ripple CEO Brad Garlinghouse keeps saying crypto will hit all-time highs in 2026. Standard Chartered predicts XRP will reach $8 by year-end. Wall Street analysts have targets ranging from $3 to $14.

So why is the price going the opposite direction?

The answer lies in four structural forces that explain the gap between XRP’s fundamentals and its price action — and why the disconnect might persist longer than bulls expect.

The Great Unlock: Post-Settlement Profit Taking

For years, XRP holders were trapped.

The SEC lawsuit that began in December 2020 created a cloud of uncertainty that made selling risky and buying foolish. Exchanges delisted the token. Institutions stayed away. Early believers had no choice but to hold and hope.

When Ripple finally settled with the SEC in August 2025, that uncertainty vanished overnight. And so did the reason to keep holding.

After years of waiting, early investors finally had their exit window. Many took it. They sold into strength, locking in profits accumulated during the lawsuit era. That selling wave increased circulating supply and overwhelmed short-term demand.

This wasn’t panic selling — it was rational profit-taking after years of forced patience. But the effect on price was the same: a persistent supply overhang that keeps rallies shallow and short-lived.

Even moderate buying interest has struggled to absorb this volume. Every time XRP pushes higher, long-term holders use the opportunity to reduce exposure.

The Escrow Problem: 1 Billion Tokens Every Month

Here’s something most XRP bulls don’t like talking about: Ripple releases 1 billion XRP from escrow every single month.

This was designed to create predictability and prevent Ripple from dumping tokens on the market. In theory, it should provide confidence. In practice, it creates constant selling pressure.

Ripple’s January 2026 escrow unlock released 1 billion XRP. Approximately 700 million was quickly relocked, but roughly 300 million tokens entered circulation as net new supply.

That’s 300 million new tokens every month competing with buyer demand.

Even in months when sentiment is positive and buyers are active, they’re swimming against a current of new supply. It’s like trying to fill a bathtub with the drain open.

This structural pressure doesn’t show up in headlines about partnerships or ETF inflows. But it shows up in the price.

The Rotation Trade: Capital Flows to Bitcoin and AI

Money in crypto is finite. When capital flows somewhere, it flows away from somewhere else.

In 2025 and early 2026, the big narratives have been Bitcoin (ETFs, institutional adoption, potential reserve asset) and AI-related tokens. Payment-focused tokens like XRP have been left behind.

The numbers tell the story. In December 2025, XRP ETFs saw $483 million in inflows. Sounds impressive until you see that Bitcoin ETFs lost $1.09 billion and Ethereum lost $564 million in the same period.

Institutions weren’t choosing XRP over Bitcoin — they were fleeing Bitcoin and parking some money in XRP as a hedge. That’s not the same as conviction buying.

Meanwhile, the AI narrative has captured retail imagination. Tokens connected to artificial intelligence, decentralised computing and machine learning have seen explosive interest. XRP’s “cross-border payments” story feels boring by comparison.

When traders and funds are chasing AI, they’re not accumulating payment tokens. XRP sits in a narrative dead zone — too established to be exciting, too specialised to capture the zeitgeist.

The Utility Paradox: You Don’t Need to Hold XRP to Use It

This is the most uncomfortable truth for XRP holders.

Ripple’s flagship product is On-Demand Liquidity (ODL), which allows financial institutions to use XRP as a bridge currency for cross-border payments. Sounds bullish for the token, right?

Here’s the problem: ODL doesn’t require anyone to hold XRP for extended periods.

The way it works is simple. Tokens are bought, used for settlement, and sold within seconds. A bank in Mexico buys XRP, transfers value to a bank in the Philippines, and the receiving bank immediately sells the XRP for local currency.

The entire transaction happens in seconds. No one holds the token. No one needs to accumulate it.

This means even with broader ODL usage, XRP may not absorb enough economic value to justify aggressive price targets. The utility is real, but the token economics don’t translate utility into sustained demand.

Compare this to Bitcoin, where the investment thesis is simple: buy and hold forever as digital gold. Or Ethereum, where tokens get locked in staking and DeFi protocols, reducing circulating supply.

XRP’s utility model is efficient for payments but inefficient for price appreciation. The better Ripple’s technology works, the less anyone needs to hold the token.

The Prediction Problem: Why Forecasts Keep Missing

Given these structural headwinds, why do analysts keep predicting $8, $10, even $14?

Because the bull case isn’t wrong — it’s just conditional.

Standard Chartered’s $8 target requires ETF inflows reaching $4-8 billion total (currently at $1.37 billion), the CLARITY Act passing, and sustained institutional adoption. If all three happen, $8 is achievable.

But “if all three happen” is doing a lot of heavy lifting.

The more realistic scenario is XRP trading between $2.50 and $3.50 through most of 2026, building institutional ownership while price reflects adoption restrained by lack of parabolic catalysts.

Some analysts are even more bearish. The Motley Fool recently argued XRP could fall 50% to around $1 by year-end, suggesting the current $116 billion market cap is pricing in too much optimism from last year’s speculative rally.

The truth is probably somewhere in the middle. XRP isn’t going to zero — it has real utility, real institutional backing, and real regulatory clarity. But it’s also not going to $14 without a fundamental shift in how the token captures value.

What Would Change the Picture?

For XRP to break out of its current range, several things need to happen:

**ETF inflows need to accelerate dramatically.** Monthly inflows above $300 million indicate robust institutional commitment. Significant drops below this level signal mandate-driven buying has exhausted.

**Real banking adoption needs to materialise.** Not just pilots and partnerships — actual banks using XRP for settlement at scale. So far, most of Ripple’s partnerships use the messaging layer without requiring the token itself.

**The CLARITY Act needs to pass.** This would provide a clearer legal framework for banks to engage with digital assets, reducing compliance risks for institutional XRP adoption.

**RLUSD needs to gain traction.** Ripple’s stablecoin launching in Japan and other markets could create recurring demand for XRP as a bridge asset if adoption scales.

**Macro conditions need to turn risk-on.** Expected Federal Reserve rate cuts would reduce the appeal of holding cash and push capital toward assets with asymmetric upside.

Until these catalysts align, XRP likely consolidates between $1.50 and $2.50 while waiting for its next breakout window.

The Bottom Line

XRP is not a bad investment. It’s a misunderstood one.

The fundamentals are genuinely strong — stronger than at any point in the token’s history. Regulatory clarity, institutional adoption, real utility, and growing ETF demand are all real.

But fundamentals don’t move price. Supply and demand move price.

Right now, supply is being constantly replenished through escrow releases and profit-taking from long-term holders. Demand is being diluted by capital rotation toward sexier narratives. And the utility model doesn’t require accumulation.

The result is a token that keeps disappointing despite having every reason to succeed.

For believers, this is accumulation territory — a chance to buy before the catalysts align. For sceptics, it’s a warning that strong fundamentals don’t guarantee strong returns.

The gap between XRP’s promise and its price tells you everything you need to know about crypto in 2026: in a market driven by narrative and momentum, being right about utility isn’t enough. You also need to be right about timing.

And right now, XRP’s timing remains frustratingly unclear.

—

*Disclaimer: This article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry significant risk. Always conduct your own research before making investment decisions.*

The post XRP Has the Best Fundamentals in Crypto — Here’s Why the Price Keeps Falling Anyway appeared first on European Business & Finance Magazine.