XRP Takes Hit as Traditional Investors Make U-Turn: What Happened?

CoinShares’ most recent weekly report on digital asset funds indicates that XRP-focused investment products saw withdrawals of about $400,000 in the previous week. XRP had been a favored option for traditional investors seeking exposure to cryptocurrency through these instruments for several weeks.

Since the beginning of 2023, approximately $3 million have been invested in XRP using this approach. However, last week’s results marked the end of that run and showed a shift in the sentiment of this class of investors toward XRP.

Possible reasons

There were two main reasons for this reversal. First, major cryptocurrencies like Bitcoin (BTC) reached the critical psychological threshold of $30,000, leading to a wave of profit-taking and selling sentiment, and a broad market correction.

The second factor, which is more speculative, is the lack of a ruling in the SEC’s case against Ripple, which will determine whether or not XRP is a security. Investors had been keen to gain exposure to XRP in anticipation of the case’s outcome, which was expected to be announced in the spring. However, well into the season, the verdict is still pending. This, combined with uncertainty about the market’s future direction, has probably motivated some investors to withdraw from XRP positions.

Overall, digital asset investment products saw outflows totaling $30 million last week, putting an end to a six-week run of inflows. This could be seen as a sign of cautious sentiment among investors in the digital asset market.