A colossal 1.16 billion unit sell wall, When will the 'Clarity Act' that will determine XRP's fate take effect?

▲ 엑스알피(XRP) ETF/챗GPT 생성 이미지 ©

Despite an unprecedented influx of funds into the XRP (Ripple) spot ETF market, intensifying supply shortages, a strange paradox persists where the price remains trapped in a sideways range, blocked by a colossal sell wall of 1.16 billion units formed around $1.45. Unlike Bitcoin (BTC) or Ethereum spot ETFs struggling with outflows, XRP spot ETFs demonstrated strong institutional demand with not a single day of outflows throughout May. While the market views the current robust inflows as an encouraging sign absorbing the overhead supply, it is also diagnosed that more powerful institutional catalysts, such as the passage of legislation, are needed to break the monotonous sideways trend and initiate a full-fledged surge rally.

According to investment media outlet TradingNews on May 29 (local time), the seven XRP spot ETFs currently launched in the U.S. market manage approximately $1.4 billion in assets, with over 800 million units locked in custodial institutions. Led by Rex-Osprey's XRPR and another operational structure XRPI, Bitcoin, Canary Capital, Franklin Templeton, Grayscale, and 21Shares are engaged in fierce competition. May, in particular, easily surpassed April's net inflow of $81.59 million, recording the strongest inflow since the beginning of the year. However, the asset price remains around $1.38, lower than when the ETFs were launched, observing a peculiar divergence where fund inflows and price movements are decoupled.

The primary reason for this price stagnation is the colossal sell wall of 1.16 billion XRP positioned between $1.45 and $1.46, representing break-even points for many investors. The current daily ETF inflow, ranging from $5 million to $17 million, is small compared to the overall market size, where daily trading volume exceeds $1.5 billion, making it insufficient to instantly overcome the significant selling pressure from above. However, continuous institutional accumulation acts as a strong buffer, firmly supporting the price floor and preventing further plunges. Experts predict that with 7.73 million to 8.4 million XRP tokens currently locked within funds, the circulating supply is drying up, suggesting that an explosive rebound is possible once selling pressure is exhausted.

The movement of institutional funds is also interesting. While Goldman Sachs liquidated its entire $153.8 million XRP ETF position in the first quarter of this year, experts dismissed this as merely market-making desk activation volume, not a directional bet. On the contrary, over 30 large institutional investors, including global hedge funds like Millennium and Citadel, continue to hold positions, signaling long-term confidence. Furthermore, JPMorgan maintained a positive outlook, predicting that once the XRP spot ETF market moves past its initial stages and gains full momentum, it will attract substantial funds, ranging from a minimum of $4 billion to a maximum of $8.4 billion in its first year alone.

Looking ahead, the key trigger to break through this colossal sell wall and more than double fund inflows is identified as the U.S. crypto market structure bill, the CLARITY Act. If large institutions, currently hesitant to enter due to regulatory uncertainty, gain clear legal standards with the passage of the CLARITY Act, a significant influx of waiting capital could occur, causing cumulative inflows to surge up to $2.8 billion. Although the current XRP price remains below its 20, 50, 100, and 200-day exponential moving averages, and the Relative Strength Index (RSI) at 43 indicates a clear short-term bearish trend, actual adoption in the $150 trillion cross-border payment market, replacing global payment networks like SWIFT, and regulatory clarity are forming a long-term bullish momentum, suggesting that a strong rally of over 80% could be triggered the moment the $1.45 mark is reclaimed.

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