According to the report, Bitcoin, Ethereum, and XRP have all retreated to deep cycle lows, returning the entire crypto market to valuation levels not seen since late 2024. crypto slate data.
While the overall price trend looks uniformly grim, with BTC falling below $70,000 and XRP recently trading around $1.35, sentiment towards Ripple-linked tokens is decidedly less pessimistic than sentiment surrounding the two largest cryptocurrencies.
That relative optimism comes not so much from near-term spot price performance as XRP hits its lowest since November 2024, but from a cluster of near-term adjacent ecosystem catalysts that traders can trade.
While BTC and ETH behave like high-beta macro assets tied to liquidity conditions, XRP is increasingly traded with unique optionality associated with market structure upgrades and access to institutional investors.
Institutional investor flows diverge due to ETF reprice risk
The most direct manifestation of this bifurcated market optimism is in capital allocation, particularly through regulated exchange-traded funds (ETFs).
Bitcoin is losing institutional demand starting in early 2026 as macroeconomic stress intensifies.
U.S. spot BTC ETFs have recorded outflows for three consecutive months, with outflows of about $5 billion in late December and more than $1.6 billion in January, according to data from Soso Value.
Remarkably, this streak has continued into this month, with 12 products already racking up around $255 million in outflows.
These leaks highlight Bitcoin’s structural vulnerabilities in a liquidity crisis. As the primary macro hedge within a portfolio, high-asset allocators are often the first to trim when tight conditions force a retreat to cash.
Remarkably, the same outflow trend is evident in Ethereum-focused products on the market. Since last November, ETF funds have seen net outflows of more than $2.4 billion.
In contrast, XRP shows the opposite pattern within the same investment vehicle.
Launched in November, the XRP ETF has attracted approximately $1.3 billion in inflows and recorded net outflows in less than five days since its debut.
During the same period, Bitcoin and Ethereum ETFs were net sellers.
This suggests that while Bitcoin is being treated as a source of liquidity, XRP is behaving like an incremental share, with investors adding exposure as it becomes easier to buy, hold, and hedge the asset through a precisely familiar regulated wrapper.
Ripple ecosystem upgrade targets institutional DeFi
Beyond flow dynamics, the optimism surrounding XRP is rooted in specific infrastructure developments aimed at bridging traditional finance and on-chain liquidity.
On February 4, Ripple announced that Ripple Prime now supports HyperLiquid, positioning the integration as a way for institutional investors to access on-chain derivatives liquidity through a prime broker-style interface.
This release emphasizes unified access alongside margin and risk management. This is a feature that makes the decentralized finance space easier to understand for financial institutions accustomed to traditional core workflows.
While this integration will not automatically create spot demand for the token, it will strengthen the broader market perception that Ripple is aligning its institutional stack with on-chain venues, just as market structure discussions drive activity towards compliance-friendly rails.
This development coincides with the activation of “Allowed Domains” on the XRP Ledger (XRPL) mainnet.
RippleXDev has confirmed that these domains are now live, marking a major milestone for the network.
XRPL documentation defines an authorization domain as a controlled environment in which access to features such as authorized distributed Exchange can be restricted through credentials.
This represents a direct attempt to harmonize on-chain transactions with real-world compliance requirements, effectively creating a “KYC layer” that allows regulated entities to participate on-chain without the risk of blind trading partners.
Derivatives Markets Suggest Washout and Defensive Positioning Leverage
The internal mechanisms of the derivatives market further explain why sentiment towards Bitcoin and ETH remains “very bearish” even as XRP traders are positioning for the rally.
In the case of Ethereum, on-chain data reveals significant changes in market sentiment.
The Ethereum Coinbase Premium Index (30-day moving average) has fallen to its lowest level since July 2022, according to data from CryptoQuant.
The index measures the price difference between Coinbase Pro’s ETH/USD pair, which is often a proxy for US institutional demand, and Binance’s ETH/USDT pair.
The significantly negative premium suggests that selling pressure is primarily coming from US companies actively de-risking their positions.
At the same time, the market saw a massive flash of BTC leverage. Data from CoinGlass shows that Bitcoin investors have liquidated more than $3 billion in recent days amid the price slump.
Conversely, XRP derivatives suggest a cleaner market structure and asymmetric expectations. According to CryptoQuant data, XRP open interest on Binance has dropped significantly to $405.9 million, its lowest level since November 2024.
This sharp drop in open interest acts as a market reset, indicating that the speculative bubble has dissipated, which often serves as a prerequisite for a sustained trend reversal.
Furthermore, open interest in XRP options is heavily skewed towards calls, with calls accounting for 86.87% and puts accounting for 13.13%. This bias suggests that even though spot prices remain depressed, traders are using options to aim for upside without catching falling knives in the spot market.
Regulatory clarity and future market structure
Meanwhile, structural optimism for XRP is also supported by the repricing of regulatory risk, a factor that previously defined the asset’s discount.
In August 2025, the SEC issued a joint stipulation dismissing the appeal and resolving the civil enforcement action against Ripple, noting that the district court’s judgment remains in effect.
This resolution allowed the narrative surrounding Ripple and XRP to shift from litigation to financial issues.
Since then, the product has gained access to CME Group, and Ripple has embarked on an acquisition spree to further integrate its product into the traditional financial system.
Additionally, the rollout of Ripple’s stablecoin RLUSD, one of the fastest growing stablecoins on the market with over $1.4 billion in supply, also supports the story of XRP acting as a payments rail.
Additionally, XRPL’s upcoming Permissioned DEX capabilities are expected to provide the regulatory certainty needed for institutional adoption.
What does the future hold for XRP?
Market analysts are currently modeling three specific scenarios for how these different narratives will resolve in the coming months.
In the base case, risk assets remain stable and XRP maintains a “catalyst premium” relative to the overall market.
Early adoption of XRPL’s permissioned domains and DEXs could help bridge the fluidity between open and permissioned venues, potentially sustaining the narrative without a significant spike in volume.
The bullish case envisions permissioned stacks becoming the primary regulated on-chain venue for some institutions, such as those dealing with tokenized real-world assets and cross-border payment flows.
If Ripple Prime connectivity supports this transition, XRP could experience a market structure revaluation with a regulated on-chain order book commanding higher valuation multiples than standard altcoin betas.
However, a bearish scenario remains if the macro environment remains tight and ETF outflows continue to weigh on the complex. Delays in implementation even when permitted infrastructure ships could fragment liquidity and make “compliance DeFi” a story for the second half of 2026 rather than a Q1 catalyst.
So far, the data shows a clear divide. While Bitcoin and Ethereum struggle under the weight of macro liquidity and defensive hedging, the potential for the next stage of crypto market structure to be defined by authorized, certified, and institution-ready rails is driving the price of XRP higher.
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