Capital inflow into XRP surged by 1.25 billion dollars—So why is the price still falling?

XRP of Ripple is showing speculative heat as capital inflows exceeded $1.25 billion last week. According to Glassnode, XRP Hot Capital increased from $0.92 billion to $2.17 billion, a rise of 134.9%. Theoretically, this is a significant capital inflow, but looking at the broader picture, the outlook is not very optimistic. Although there is cash flow coming in, XRP is still 72% lower than the Hot Capital peak of December 2024 at $7.66 billion. This gap tells another story: traders are coming back but they are doing so cautiously. Therefore, sellers may have the upper hand at this moment. Short-term capital is speculation, not trust. This latest inflow is speculative, with traders targeting XRP for a short-term rebound. In the past, similar inflows have led to price surges, such as at the end of 2024 when XRP briefly rose to $3.40. But this inflow is still far from those euphoric highs. To match that upward momentum, XRP will need an additional nearly $5 billion in speculative liquidity. The amount of lost capital reflects the entire market. Although there is money flowing in, XRP has decreased by 2.65% on the daily chart and 1.62% over the week. Traders are still not chasing the price. Additionally, according to data from the exchange, many are preparing for downside risks. The exchange behavior indicates that the seller is in control. The exchange behavior supports a bearish outlook. Wallets holding from 100,000 to 1 million XRP are the most active sellers, transferring over 21.7 million tokens to exchanges. Next is the group of 10,000–100,000 XRP that transferred 900,000 tokens. Therefore, most of the recent cash flow may come from traders wanting to short XRP rather than stack it. This aligns with the Taker Buy-Sell Ratio, which has been negative for the entire week, meaning more selling than buying.

The refinancing rate is negative when shorts dominate. If there is anything that confirms this mood, it is the funding rate data. Aggregated across major exchanges, the funding rate of XRP has turned negative once again, meaning traders are paying a premium to maintain short positions. This indicates that the market is bearish. Even the sentiment indicators agree. According to Santiment, the weighted sentiment index of XRP is negative for 6 out of 7 days and only turned green on April 28th. The confidence in the short-term bullish trend of XRP is very fragile. CME Futures and RLUSD may change the trajectory, but not right now. Looking ahead, there are two things that could change the trajectory, but they are not here yet. First, CME Group will launch XRP futures contracts on May 19 pending regulatory approval. If approved, these contracts will provide institutions access to XRP through cash-settled instruments. This will improve liquidity and price stability over time, but will not affect the current order book. Second, Ripple's upcoming stablecoin RLUSD is said to connect traditional finance and on-chain finance. Pegged 1:1 to the US dollar and backed by cash and equivalents, it could create new demand pathways for XRP as it operates. But once again, this is a game for the future, not a current catalyst.

Conclusion: Traders Eye has two price levels: $2.16 and $2.30 Currently, XRP is caught between decreasing outflows and speculative inflows. If selling pressure persists and market sentiment remains pessimistic, XRP could drop to $2.16. However, if inflows continue and short-selling orders are tightened, moving down to $2.30 is not impossible. But any recovery will require more than just capital. The return of confidence, especially from long-term holders and institutions, will be necessary to shift away from the current bearish trend.