XRP's network activity is showing conflicting signals as its price struggles below $2. On one hand, data from CryptoQuant reveals a sharp surge in XRP burn activity, with the amount of XRP burned as fees increasing by about 1% over a day to hit approximately 400 XRP on January 25. This metric is often interpreted as a reduction in sell-off pressure, as it suggests traders are willing to hold assets and use XRP for payments, which could aid price stability and potentially signal a forthcoming price resurgence.
However, this positive on-chain signal is countered by a worrying trend in exchange reserves. Data shows XRP reserves on major exchanges like Binance and Upbit have increased significantly in January 2026. Balances on Binance reached 2.72 billion XRP, while Upbit held nearly 6.3 billion XRP, bringing total exchange reserves to almost 10% of the circulating supply. An inverse correlation has been noted, particularly with Upbit reserves; as they began rising in early January, XRP's price dropped from $2.40 to retest the $1.87-$1.88 support level.
The situation is further complicated by activity from large holders. The Whale Exchange Transactions metric for Binance, which tracks transfers between whales and exchanges, has also risen, indicating that more large holders may be moving XRP onto trading platforms, which could intensify selling pressure.
Institutional flows via XRP ETFs present a mixed picture. Since their launch in November 2025, the ETFs had recorded only two days of net outflows as of late January: $40.80 million on January 7 and a record $53.32 million on January 20. The latter was largely attributed to a broad risk-off move in US markets triggered by geopolitical tensions. Despite these outflows, cumulative net inflows remain strong at $1.23 billion, with total net assets of $1.36 billion. A report from Token Relations highlighted that December 2025 saw $483 million in XRP ETF inflows even as Bitcoin ETFs recorded outflows, suggesting a possible institutional rotation into XRP.
Analysts point to several supportive fundamentals for XRP. Ripple continues to expand use cases for RLUSD, a stablecoin on the XRP Ledger, through new partnerships. Furthermore, demand for DeFi products on the XRPL is reportedly rising. The key for price direction appears to be the $1.88 support level. Holding above it, coupled with a return of ETF inflows, could allow for a retest of $2.40. A breakdown, however, could trigger a steeper decline, with some analyses warning of a potential 45% drop toward $1.25.
