XRP News Today: $1B ETF inflows offset bearish BoJ rate risk

XRP got a much-needed boost as US jobs data signaled a cooling labor market and a more dovish Fed rate path. Lower borrowing costs would fuel leveraged buying of XRP at current price levels.

The XRP-spot ETF market added to the bullish sentiment, extending its inflow streak to 21 consecutive days on Monday, December 15. Significantly, demand for XRP-spot ETFs contrasted sharply with the US BTC-spot ETF market, which reported net outflows of $357.6 million.

Robust demand for XRP-spot ETFs and rising bets on a March Fed rate cut support a medium-term price outlook. However, the shorter-term outlook remains cautiously bearish as Friday’s Bank of Japan interest rate decision looms.

Below, I will explore the key drivers behind recent price trends, the medium-term (4-8 weeks) outlook, and the key technical levels traders should watch.

US Labor Market Cools, Raising Q1 Fed Rate Cut Bets

While the Bank of Japan’s interest rate decision will be the main event this week, US data-fueled bets on a March Fed rate cut.

Unemployment increased from 4.4% in October to 4.6% in November, while wage growth slowed from 3.7% year-on-year in October to 3.5% YoY in November.

Rising unemployment could further curb wage growth and cool consumer spending. A pullback in consumer spending would dampen demand-driven inflation, supporting a more dovish Fed policy stance. Last week’s Fed Dot Plot projected a median one rate cut in 2026, the base case for markets.

A March rate cut would allow further rate cuts in H2 2026, if the data allows. According to the CME FedWatch Tool, the chances of a March rate cut increased from 51% on December 15 to 53.3% on December 16, lifting sentiment.

XRP-Spot ETF Market Sees Inflows Hit $1 Billion

While US labor market data lifted sentiment, the US XRP-spot ETF market reflected robust institutional demand, a crucial tailwind for XRP. XRP-spot ETF issuers reported net inflows of $10.89 million on Monday, December 15, taking the since-launch inflow haul to $1 billion.

Notably, Canary XRP ETF (XRPC) continued to top the inflow table, with since-launch net inflows of $376.5 million. Meanwhile, Franklin XRP ETF (XRPZ) trailed with net inflows of $193 million, reflecting Canary Fund’s first-to-market advantage.

Bank of Japan in the Spotlight as JGB Yields Dip

A more dovish Fed rate path and robust demand for spot ETFs support a bullish medium-term outlook. However, the upcoming Bank of Japan monetary policy decision on Friday, December 19, exposes XRP to near-term downside risks.

Economists expect the BoJ to raise interest rates by 25 basis points to 0.75%, narrowing the US-Japan rate differential. Japanese Government Bond (JGB) yields have been on an upswing since August, raising fears of a yen carry trade unwind, weighing on demand for XRP.

Crucially, the BoJ may also announce its neutral rate, where monetary policy is neither accommodative nor restrictive. A 1.5% to 2.0% neutral rate would signal multiple BoJ rate hikes and a sharp narrowing in rate differentials, making yen carry trades into US assets less profitable. A yen carry trade unwind would tighten liquidity, impacting XRP and the broader crypto market.

The inverse correlation between 10-year JGB yields and XRP/USD has underscored market sensitivity to the BoJ’s policy stance. 10-year JGB yields pulled back on Tuesday, December 16, bolstering XRP demand.

For context, the BoJ raised interest rates by 25 basis points to 0.5% and cut JGB purchases on July 31, 2024. The hawkish rate hike coincided with a dovish Fed policy stance, triggering a yen carry trade unwind. XRP tumbled from $0.6591 on July 31, 2024, to $0.4320 on August 5, 2024, marking a 34.5% loss.

Given the market concerns over the BoJ’s monetary policy decision, 10-year JGB yields will require monitoring.

Bullish Medium-Term Outlook Faces Headwinds

The threat of market disruption from a hawkish BoJ rate hike and delays to the Market Structure Bill support a cautiously bearish short-term outlook (1-4 weeks).

Meanwhile, rising expectations of a March Fed rate cut, strong spot ETF inflows, and hopes for the Senate passing crypto-friendly legislation are likely to bolster XRP demand.

Given market sensitivity to the Fed rate path, incoming economic data will also influence sentiment. The US CPI Report, due out on Thursday, December 18, will affect the Fed’s policy stance.

In my view, the market dynamics support a cautiously bearish short-term (1-4 weeks) outlook, exposing the November 21 low of $1.8239. However, the medium-term (4-8 weeks) and longer-term (8-12 weeks) outlooks remain bullish, with price targets of $2.35 and $2.5, respectively.

Downside Risks to Bullish Medium-Term Outlook

While the medium-term outlook remains bullish, several scenarios could derail it. These include:

• The Bank of Japan raises interest rates and indicates multiple rate hikes.
• US inflation rises, signaling a more hawkish Fed rate path.
• The MSCI delists digital asset treasury companies (DATs). Delistings would likely reduce interest in XRP as a treasury reserve asset.
• US Senate opposes the Market Structure Bill.
• XRP-spot ETFs report outflows.

These events would likely send XRP toward the November low of $1.82, supporting the bearish short-term outlook.

Nevertheless, XRP-spot ETF demand, a broadening investor base, increased XRP utility, and progress toward crypto-friendly legislation support a longer-term move toward $3.

In summary, the short-term outlook remains cautiously bearish as fundamentals and the technicals align. Meanwhile, the medium- to longer-term outlooks are constructive.

Financial Analysis

Technical Outlook: EMAs Signal Caution

XRP gained 1.64% on Tuesday, December 16, partially reversing the previous day’s 3.95% loss to close at $1.9304. The token outperformed the broader crypto market, which advanced 1.07%.

Despite Tuesday’s gains, XRP remained below the 50-day and 200-day Exponential Moving Averages (EMAs), signaling a bearish bias.

Key technical levels to watch include:

• Support levels: $1.9112, $1.8239, and then, $1.75.
• 50-day EMA resistance: $2.1886.
• 200-day EMA resistance: $2.4366.
• Resistance levels: $2, $2.2, $2.35, $2.5, $2.62, $2.8, $3.0, and $3.66.

Looking at the daily chart, a break below the $1.9112 support level would expose the November 21 low of $1.8239. A sustained fall through $1.8239 would bring the $1.75 support level into play, reinforcing the bearish short-term outlook.

However, a break above the $2 psychological level would open the door to retesting the 50-day EMA and the $2.2 resistance level. A sustained move through the 50-day EMA would indicate a near-term bullish trend reversal.

A bullish trend reversal would suggest a medium-term (4-8 weeks) climb toward $2.35 and the 200-day EMA. A break above the EMAs supports the medium-term outlook, and a longer-term (8-12 weeks) $2.5.

Fundamental Indicators: Corporate Interest, ETF Demand, and Legislation

Near-term price drivers include:

• XRP-spot ETF flow trends.
• Blue-chip companies’ positions on XRP as a treasury reserve asset.
• Crypto-related regulatory developments on Capitol Hill.
• MSCI’s decision on DAT listings.
• US economic data and March Fed rate cut bets.
• The BoJ’s interest rate decisions and forward guidance.

Bullish Structure: What Happens if XRP Reclaims $2.0?

Failure to break above the $2.0 level would leave the $1.9112 support level in play. A sustained fall through $1.9112 would pave the way toward the $1.75 support level and the lower trendline. Breaching the lower trendline would affirm a bearish trend reversal.

Meanwhile, a break above the $2.0 handle would support a move toward the upper trendline. A sustained move through the upper trendline would reinforce the bullish medium-term (4–8 weeks) target of $2.35 and longer-term (8–12 weeks) target of $2.5.

However, rejection at the $2.0 psychological level and a drop below $1.8239 would invalidate the bullish medium-term outlook.

Outlook: Reclaiming $2.0 Key to Short-Term Outlook

Looking ahead, US economic indicators, the BoJ’s monetary policy decision and neutral rate, and XRP-spot ETF flows will dictate near-term trends.

Softer inflation and strong XRP-spot ETF inflows are likely to cushion the effects of a hawkish BoJ.

To summarize, a hawkish BoJ rate hike would support a near-term drop toward the November 21 low of $1.8239. A break below $1.8239 would affirm the near-term bearish trend reversal.

However, strong demand for XRP-spot ETFs and softer US data support a medium-term (4–8 weeks) move to $2.35. A March Fed rate cut and the Senate passing the Market Structure Bill would reinforce the longer-term (8–12 weeks) price target of $2.5. Reclaiming $2.5 would open the door to retesting $3.0.