XRP Hits 7-Year Low: What’s Behind the Drop and Why 2026 Could Be a Turning Point

• Why Is XRP at a 7-Year Supply Low?
• Institutional Demand Heats Up: The ETF Effect
• Retail vs. Institutions: A Diverging Sentiment
• Historical Context: How Does This Compare?
• FAQs: Your XRP Questions Answered

XRP, the cryptocurrency tied to Ripple, has plummeted to its lowest availability levels in seven years, sparking mixed reactions among investors. While the token has struggled in 2026—losing over 10% year-to-date—its scarcity on exchanges and surging institutional demand (especially via XRP ETFs) hint at a potential rebound. With bullish forecasts for the broader crypto market, could XRP defy the odds and rally to new highs? Here’s a deep dive into the data, trends, and expert insights.

Why Is XRP at a 7-Year Supply Low?

XRP’s circulating supply on exchanges has dwindled to levels last seen in 2019, according to data from CoinMarketCap. This scarcity is striking, given the token’s rocky performance: it’s currently trading below $2, down 10% since January 2026. Analysts at BTCC attribute the supply crunch to two factors: (1) long-term holders accumulating during the dip, and (2) institutional players like ETF issuers snapping up tokens to back new funds. "When supply tightens, even modest demand spikes can trigger price surges," notes a BTCC market report.

Institutional Demand Heats Up: The ETF Effect

Spot XRP ETFs have logged 30 consecutive days of net inflows, per TradingView data—a stark contrast to outflows plaguing other crypto funds. While volumes aren’t yet at Bitcoin-ETF levels, the trend is undeniable. Each inflow forces issuers to buy actual XRP, further straining exchange inventories.Source: Cointelegraph/X (December 31, 2025). With more ETFs awaiting approval, this demand could explode. "Seed capital alone for a single fund can lock up millions of XRP," says a trader at BTCC.

Retail vs. Institutions: A Diverging Sentiment

Retail investors remain wary—after all, XRP’s "moonboy" predictions of $100+ have repeatedly flopped. But institutions? They’re betting big. The BTCC team points to derivatives data showing whales are accumulating call options for late 2026, signaling bullish expectations. "This isn’t 2017’s HYPE cycle; it’s a calculated play on scarcity," remarks an analyst.

Historical Context: How Does This Compare?

XRP’s last supply squeeze in 2019 preceded a 200% rally. But history doesn’t always repeat. Regulatory hurdles (like Ripple’s ongoing SEC case) and macro risks (e.g., Fed rate cuts) could muddy the waters. Still, with crypto’s 4-year "halving cycle" peaking in 2026, odds favor a broader market uptrend—and XRP’s scarcity might just amplify its gains.

FAQs: Your XRP Questions Answered

Is XRP a good buy in 2026?

While its supply crunch is bullish, diversification is key. The BTCC team advises allocating no more than 5% of a crypto portfolio to XRP.

Could XRP ETFs drive the price to $5?

Possible, but not guaranteed. ETF demand must offset selling pressure from Ripple’s escrow releases.

What’s the biggest risk for XRP?

Regulation. A negative SEC ruling or exchange delistings could negate scarcity benefits.