## Why Has the XRP Spot ETF Surpassed $1 Billion But the Price Has Not Followed Suit?

The assets under management (AUM) of the XRP spot ETF have reached $1.14 billion, setting a new record. Since mid-November, net inflows have exceeded $423 million. While these figures look impressive, market reactions have been relatively muted: XRP price hovers around $2.10, with a market cap of $12.73 billion, and only $13.485 billion in 24-hour trading volume.

This math puzzle is not easy for many: with over a billion dollars flowing into the ETF, why hasn't the price surged accordingly?

**Billions in Capital Inflow, Why the Tepid Price Response?**

The core issue lies in a commonly overlooked distinction: AUM (assets under management) is a snapshot number, while net creation is the actual flow that influences price.

When Bitcoin spot ETFs launched, every inflow directly pushed up the price. This "packaged demand" and "price revaluation" happened almost simultaneously. But XRP is different. $1.14 billion sounds substantial, but the sources of this capital are diverse:

- Initial allocations from early investors
- Inventory buffers from market makers
- Book gains from market volatility

Breaking down this $1.14 billion, over the past 35 days, the average daily inflow has been only about $12 million. In a market where daily spot trading volume often reaches hundreds of millions of dollars, this pace is more of steady growth than a "powerful driver."

**From Billion to Percentage: 1% Liquidity Lock**

At a price of $2.10, $1.14 billion in XRP ETF roughly equates to locking about 543 million tokens. Compared to XRP's circulating supply of 6.067 billion, this means approximately 1% of the circulating supply is "frozen" in the ETF.

Is this 1% critical? Yes. It broadens access, attracting a new class of holders (institutions, advisory accounts, people who don't want the hassle of wallets). But is this 1% enough to trigger explosive price movement? Far from it.

Looking at Bitcoin provides a clearer picture. By the end of 2025, the US spot Bitcoin ETF is expected to hold about 1.298 million BTC, representing 6.2% of Bitcoin's total supply. This is the scale that can truly generate a "warehouse effect"—enough floating supply locked into non-trading structures. When demand remains stable, the remaining liquidity faces upward pricing pressure. XRP's packaging footprint still falls far short of this scale.

**Invisible Hedging: The "Short" Behind Spot Buying**

A layer most retail investors don't see is the hedging operations by institutions. Authorized Participants (APs) and market makers often short futures or perpetual contracts to hedge risks while purchasing XRP spot. This hedging activity is already mature for XRP:

- Derivative open interest: about $3.4 billion
- 24-hour futures trading volume: about $2.56 billion

This means that a significant portion of demand seemingly flowing into the spot market is being absorbed by synthetic sell-offs. Retail investors see "large ETF inflows," but the price is being "flattened" by this invisible hedging layer.

**Supply Calendar and Regional Fragmentation Suppressions**

Ripple's monthly release mechanism, which can release up to 1 billion XRP from escrow, shapes a "known recurring rhythm." While not every month releases the full amount, it creates a predictable pattern. This rhythm makes liquidity providers more cautious in quoting prices—a market expecting steady supply behaves very differently from one expecting scarcity.

Meanwhile, XRP's spot trading is highly concentrated on overseas exchanges. US exchanges are regaining some share, but overall liquidity remains dispersed across multiple pools. Each pool has different participants, fee structures, and hedging strategies. This fragmentation makes inflows into individual pools easier to absorb without triggering global price jumps.

**Lack of the "Ruthless Vacuum" Conditions**

This doesn't mean XRP ETFs are meaningless. On the contrary, they mark three significant shifts:

1. Packaging has moved from novelty to normalization—users now treat XRP ETFs as a routine tool, not a special event
2. Institutions and advisors now have convenient ways to hold XRP without dealing with wallets and multiple trading venues
3. When market sentiment improves, the infrastructure for larger upward moves is already in place

But to make ETF growth and spot prices move in a tightly coupled manner like Bitcoin, three conditions need to change:

- Accelerated net creation, enough to overwhelm regular sell-offs
- Hedging layers gradually unwind rather than accumulate
- Liquidity concentrates in deeper, cleaner onshore pools, reducing friction and detours

The current $1 billion ETF scale is delivering a steady flow, not creating a flood. The pipeline is in place, but it hasn't reached the "ruthless vacuum" intensity—the critical point that can absorb all floating supply and force prices upward.

In other words, the XRP ETF story is real, but its influence is still evolving from "new entry point" to "ongoing absorber." Patience and observation are the right approach at this moment.