XRP Rally Hinges on New Demand as Fund Inflows Slow

XRP gained nearly 16% in one week but then shed 7% almost overnight. The cryptocurrency's rally was driven mainly by traders forced to close short positions, and that buying momentum typically runs out. As a result, the question on everyone's mind is whether XRP has simply paused or if its rally is already over.

According to recent data, the biggest jump occurred on September 21, when exchanges were forced to close around $300 million in short positions across the crypto market within an hour. XRP had one of the most heavily shorted positions at that time. This buying pressure drove prices higher, forcing even more short positions to close.

However, once those forced buyers have exited the market, the rally needs a new source of demand to continue. Typically, the next wave of buyers would come from spot XRP funds. U.S. spot XRP ETFs have attracted around $1.71 billion since their launch in November 2025, currently holding about 1.7% of all XRP.

However, fund inflows have slowed in September, with these funds bringing in only $10 million to $19 million weekly, which is notably less than the $28 million they received on August 26. Without new demand to replace the short covering, XRP may struggle to maintain upward momentum.