TLDR
- XRP ETFs attracted $478 million in December, maintaining a consistent inflow streak.
- Bitcoin and Ether ETFs faced outflows exceeding $1.7 billion amid market volatility.
- XRP’s cross-border use case continues to appeal to long-term investors.
- BTC and ETH ETF outflows are linked to holiday repositioning and low liquidity.
Spot XRP exchange-traded funds (ETFs) in the U.S. experienced a notable achievement in December, maintaining a 29-day streak of net inflows. Despite market volatility, XRP ETFs recorded $8.44 million in inflows on December 29. This brings their cumulative total to approximately $1.15 billion since their launch. The overall net assets in these funds reached $1.24 billion, showing resilience even as broader market conditions and XRP’s own price faced downward pressure.
Strong Inflows Amid a Volatile Market
The XRP ETF sector has been a standout performer, consistently attracting capital despite the challenges that other digital asset ETFs, particularly Bitcoin and Ether, faced during December.
The consistent inflows into XRP ETFs can be attributed to factors such as regulatory clarity and XRP’s use case for cross-border settlements, offering investors a differentiated exposure compared to Bitcoin or Ether, which are more commonly traded.
An expert from Kronos Research, Vincent Liu, attributed the inflows to XRP’s regulatory certainty and its unique positioning in cross-border payments. “XRP’s cross-border settlement use case offers differentiated exposure, which continues to attract long-term capital,” Liu said. These steady inflows reflect investor confidence in XRP’s long-term utility, especially in comparison to the crowded Bitcoin and Ether markets.
Contrast with Bitcoin and Ether ETFs
In stark contrast to the growth in XRP ETFs, Bitcoin (BTC) and Ether (ETH) ETFs struggled in December, with both seeing significant net outflows. Bitcoin ETFs, for example, lost more than $1.1 billion throughout the month, with the largest single-day outflow on December 15, amounting to $357.7 million. Ether ETFs also saw around $612 million in outflows, with substantial withdrawals recorded on December 15 and 16.
The reasons behind the outflows in these two prominent digital assets are largely attributed to market volatility and year-end repositioning, where investors typically adjust their portfolios.
According to Glassnode, the 30-day moving average for net flows into Bitcoin and Ether ETFs has remained negative since early November. This points to subdued institutional demand and a reduction in crypto market liquidity.
Holiday Period Outflows and Expected Rebound
Despite the significant outflows from Bitcoin and Ether ETFs, analysts noted that such withdrawals are typical during the Christmas period. The combination of holiday positioning and thinner market liquidity often leads to greater volatility and temporary outflows.
Liu further explained that this is not a sign of weakening demand for these assets but a reflection of typical seasonal market behavior. As institutional desks return to the market in early January, flows are expected to normalize, and investor sentiment may stabilize.
While the market pressure on Bitcoin and Ether ETFs was evident, it does not appear to signal long-term declines for these digital assets. Liu suggested that Bitcoin would likely trade within a range-bound bull market profile due to its institutional positioning and macroeconomic sensitivity. On the other hand, Ethereum’s fundamentals, tied to network adoption and real-world utility, could drive stronger upside potential.
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