What’s Next For XRP?

January 8th, 2026 by Trefis Team
XRP: Bitwise XRP ETF logo
XRP
Bitwise XRP ETF

XRP has delivered impressive gains so far in 2026 – up 18% in just the first week. What’s driving this? Three interconnected forces: spot ETF inflows exceeding $1 billion, a dramatic supply crunch on exchanges, and regulatory clarity following the SEC lawsuit’s resolution in August 2025.

But here’s the critical question: can this rally push XRP past $5?

We think so.

But before we dive into the factors that could fuel this XRP rally, if you seek an upside with less volatility than holding an individual stock, consider the High Quality Portfolio. It has comfortably outperformed its benchmark – a combination of the S&P 500, Russell, and S&P MidCap indexes – and has achieved returns exceeding 105% since its inception. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics. Separately, see – Buy or Sell Amazon.com Stock?

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Image by Miloslav Hamřík from Pixabay

Understanding What’s Already Happened

The foundation matters. XRP’s spot ETFs have demonstrated remarkable institutional appetite, maintaining consistent inflows even during broader market declines. Combined with exchange reserves falling to multi-year lows, we’re seeing a classic supply-demand squeeze. The SEC victory removed a massive regulatory overhang that had haunted the token for years.

Yet XRP closed 2025 down 21%, having crashed from a July peak of $3.66 to around $1.85 by year-end. So while the fundamentals improved materially, price action told a different story.

The Catalysts That Could Drive XRP to $5 and Beyond

  1. The Market Structure Bill: The Senate is marking up the bill right now, with floor votes expected in Q1 2026. When the House passed it in July 2025, XRP jumped 14.69% in one day. Full passage legitimizes XRP for institutional portfolios and removes compliance barriers that have blocked major investors.
  2. ETF Infrastructure Accelerating: Five XRP ETFs have attracted $1.07 billion in their first month. The SEC’s Generic Listing Standards now allow new ETFs to launch after just 2 days instead of 240. WisdomTree’s XRP ETF is next in line, and analysts expect over 100 crypto ETFs in 2026. Standard Chartered has a target of $8 for XRP if sustained ETF inflows continue.
  3. Real Banking Adoption: This matters most. 40% of RippleNet’s 300+ financial institutions are actively using XRP for On-Demand Liquidity in live transactions, not just pilots. SBI Remit is expanding XRP corridors across Asia. Santander, SCB Thailand, and others are running production-level settlements. ODL now covers 80% of global remittance corridors, creating consistent demand.
  4. Supply Crunch Intensifying: Flare Network will lock 5 billion XRP by mid-2026. ETFs have removed 500+ million XRP from circulation. Exchange supply hit 1.6 billion tokens – a 7-year low. When the liquid supply drops while demand rises, basic economics takes over.
  5. RLUSD Unlocking Enterprise Adoption: Ripple’s stablecoin has reached $1.3 billion in circulation since launching in December 2024. The game-changer: banks can now use RLUSD for stable settlement while XRP provides instant liquidity between currencies, solving the volatility problem that kept adoption in pilot purgatory. SBI Remit and BNY Mellon are already on board.
  6. Favorable Macro Shift: Goldman Sachs predicts two more Fed rate cuts in 2026, bringing rates to 3-3.25%. Lower rates historically boost crypto by increasing liquidity and appetite for risk assets, reversing the 2022-2024 tightening cycle.
  7. Banking Charter Wild Card: Ripple’s December 2025 application for federal bank status, if approved in 2026, would provide direct Federal Reserve access and open XRP to pension funds and insurance companies.

XRP Price Targets

  • Conservative ($3-5): Requires regulatory follow-through and scaling banking participation. Realistic if $2.00 becomes support and institutional flows continue.
  • Bullish ($5-8): Standard Chartered’s $8 target assumes sustained ETF inflows and regulatory clarity.
  • Extreme ($10+): Requires all catalysts hitting simultaneously – full banking charter, major institutional allocations, and ODL volumes jumping from current $15-20 billion to $50+ billion annually.

The Risks

  1. Technical weakness: Death cross formation points to a possible decline toward $1.25. Resistance at $2.41 has 1.56 billion tokens accumulated, creating a supply wall.
  2. The utility disconnect: Daily active addresses plummeted 94% from 600,000 in March 2025 to 38,500 in December. Banks can use RippleNet messaging without touching the token. Network adoption remains weak despite institutional support.
  3. Whale distribution: Early investors realized $721 million in gains, using ETF liquidity to exit. Large holders selling at resistance levels can cap rallies regardless of fundamentals.
  4. Legislative delays: The government shutdown killed 2025 crypto legislation hopes. XRP fell 33% during the shutdown. If the Market Structure Bill stalls past Q1, institutional unlocking gets postponed indefinitely.
  5. Competition: Stablecoin growth on Ethereum and other networks could erode RLUSD’s importance and weaken the case for XRP.
  6. Macro deterioration: Yen carry trade unwinds, geopolitical tensions, and AI market disruptions could trigger risk-off flows that disproportionately hit high-beta tokens. See more on downside risk factors that could weigh on XRP price – How XRP Price Falls To $1?

The Verdict

XRP has better fundamentals entering 2026 than ever before. Regulatory clarity, ETF infrastructure, real banking adoption through ODL, and improving macro conditions create a legitimate path to $5+.

But execution risk is enormous. The gap between “300 banks using RippleNet” and “300 banks creating sustained XRP demand” remains wide. RLUSD must convert messaging-only clients into full ODL users. The Market Structure Bill must pass. ETF inflows must continue. The $2.41 and $3.00 levels are critical battlegrounds. Break above with volume, and $5 becomes achievable. Fail to hold $2, and we retest $1.50-1.80. The narrative has never been better. Now Ripple needs to prove utility actually drives token demand at scale.

That being said, investing in a single stock or token without comprehensive analysis can be risky. Consider the Trefis Reinforced Value (RV) Portfolio, which has outperformed its all-cap stocks benchmark (combination of the S&P 500, S&P mid-cap, and Russell 2000 benchmark indices) to produce strong returns for investors. Why is that? The quarterly rebalanced mix of large-, mid-, and small-cap RV Portfolio stocks provided a responsive way to make the most of upbeat market conditions while limiting losses when markets head south, as detailed in RV Portfolio performance metrics.

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