XRP’s Limited Supply Sparks Price Momentum

January 3, 2026

At the start of 2026, XRP is demonstrating a significant fundamental indicator that is catching the eye of the market. The cryptocurrency is currently testing the crucial $2.00 mark, bolstered by a noticeable shift in on-chain dynamics. There is a rapid reduction in the available tokens on exchanges, coinciding with significant institutional accumulation through ETFs, resulting in a clear tightening of supply and demand.

In addition to market mechanics, positive sentiment is being fueled by regulatory advancements. Japan has recently decreased its cryptocurrency tax rate from 55% to 20%, along with authorizing its first domestic XRP-focused ETF. These developments have led to increased trading during Asian market hours. Additionally, investors are eagerly anticipating discussions on the US Market Structure Bill slated for January 15th.

Technological progress is also contributing to XRP’s momentum. The integration of JPMorgan’s GTreasury project into the XRP Ledger is seen as a critical step in embedding blockchain technology further into traditional financial systems.

A Historical Decline in Exchange Reserves
The primary driver behind XRP’s current price surge is the sharp decrease in liquid supply. Glassnode data reveals that the volume of XRP held on centralized exchanges has dropped to a level not seen in eight years, standing at just 1.6 billion tokens as of January 2nd. This marks a significant 57% decline from the 3.76 billion tokens recorded in October 2025. Investors are moving their holdings from exchanges to long-term storage solutions, signaling a reduction in immediate selling pressure.

ETF Inflows Outpacing New Supply
The diminished supply is mainly due to high demand from US spot ETFs, which launched in November 2025. These investment vehicles have absorbed around 750 million XRP over the past two months, amounting to net inflows exceeding $1.16 billion. The institutional purchasing is now surpassing the natural rate of new supply. While Ripple released one billion XRP from escrow accounts at the beginning of the month, 700 million was promptly returned to lockup. The net addition of 300 million tokens to the circulating supply is being offset by ongoing ETF acquisitions.

Price Projection and Market Outlook
As of now, XRP is trading at $1.99, near its daily peak. Analysts, such as those at Standard Chartered, forecast that the asset could reach $8.00 by the end of 2026 if ETF inflows continue. Traders are closely monitoring whether a definitive breakout above the $2.05 resistance level can be achieved in the near term. Given the historically low exchange balances and increasing funding rates, the first quarter of 2026 is likely to be defined by the balance between constrained supply and strong institutional demand.