XRP has opened the 2026 trading year with significant momentum, achieving a major milestone by breaking through the $2.00 psychological barrier. This rally has propelled it past BNB to claim the position of the world’s fourth-largest cryptocurrency by market capitalization. The surge is attributed to a powerful confluence of institutional buying and a historic reduction in available supply on exchanges.
Supply Shock Intensifies as Demand Rises
A critical factor behind the price appreciation is a severe supply shock. On-chain analytics reveal that XRP reserves held on centralized cryptocurrency exchanges have plummeted to their lowest level in eight years. Since October 2025, the amount of XRP on trading platforms has been more than halved. Investors are increasingly moving their holdings into private, cold storage wallets. This mass withdrawal from exchanges reduces immediate selling pressure, creating a supply squeeze that amplifies upward price movements when demand is steady or increasing.
This demand is being fueled substantially by institutional capital flowing into U.S. spot ETFs. Since their launch in late 2025, these investment vehicles have seen consistently growing interest. Net inflows reached the tens of millions of dollars in the first few days of January alone. The cumulative volume since trading began has now surpassed the $1 billion mark, highlighting rising confidence from institutional investors.
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Regulatory Developments Fuel Market Optimism
Beyond pure market mechanics, regulatory prospects are contributing to positive sentiment. Market participants are closely watching the U.S. Senate, which is expected to debate the “CLARITY Act” in mid-January. This proposed legislation aims to clarify the regulatory boundaries between the SEC and the CFTC. Furthermore, a widespread market expectation exists that the protracted legal battle between Ripple and the SEC could reach a resolution under the new administration, potentially removing a years-long overhang of uncertainty.
Technical and Fundamental Alignment
The favorable fundamental backdrop is clearly reflected in XRP’s market performance. The asset is currently trading at $2.13, marking a weekly gain of approximately 14%. With a total market valuation of around $123 billion, it has successfully reclaimed a top-four ranking.
Analysts at Standard Chartered have expressed optimism for XRP’s trajectory throughout the year, citing the current confluence of factors. In the near term, trader focus is fixed on the resistance level near $2.18. A sustained daily close above this price point would, from a technical analysis perspective, open the path toward the next key targets at $2.40 and $2.50.
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