[Digital Today reporter Yoonseo Lee] XRP appears to be taking the lead in the crypto market at the start of 2026. It has posted a standout 25 percent rise since the start of the year, overtaking Bitcoin and Ethereum and rapidly emerging as a core investment target for Wall Street and institutions.

On Jan. 7 local time, blockchain media outlet Cointelegraph reported that XRP is riding a strong uptrend on the back of four positive factors since the start of the year, including inflows into exchange-traded funds (ETFs), strong social indicators, more active on-chain data and expanding partnerships. The industry is seeing assessments that the rally was effectively a foreseen outcome as these fundamental improvements converged.

Interest in XRP is surging in the ETF market in particular. According to on-chain analytics firm CoinGlass, about $100 million has flowed into 4 spot XRP ETFs since the start of the year, and they have recorded net inflows every day so far.

Social indicators also show strength. According to artificial intelligence (AI) analytics firm Market Prophit, both retail investors and "smart money" are maintaining a positive outlook on XRP.

XRP holdings on crypto exchange Binance falling to the lowest level in 2 years is also noteworthy. This means investors are opting to hold for the long term and selling pressure is easing. XRP network activity also surged. According to XRPscan, XRP transaction volume has risen more than 50 percent over the past 2 weeks.

Ripple is expanding adoption of the XRP Ledger through partnerships with Japan's Mitsubishi UFJ Financial Group (MUFG), Mizuho Financial Group and SMBC Nikko Securities. Approval from the U.S. Office of the Comptroller of the Currency (OCC) to establish Ripple National Trust Bank is also a positive sign. Ripple President Monica Long said in a recent interview with Bloomberg that Ripple was valued at $40 billion but has no plans for an initial public offering (IPO).

In addition, business news outlet CNBC called XRP a "new crypto dark horse" and named it the strongest crypto trade of the year. XRP has risen 25 percent since early January, posting results that outpaced Bitcoin (6 percent) and Ethereum (10 percent).

A spotlight on scarcity from declining supply is also cited as a key driver of this rally. The XRP Ledger (XRPL) has a deflationary mechanism that permanently burns all transaction fees within the network. As mentioned earlier, the burn pace is accelerating as transaction volume has surged more than 50 percent recently, leading to a decline in circulating supply and adding to upward price pressure.

Market experts agree that attention should focus on the current moment, when institutional funds are flowing in through ETFs (rising demand) and circulating supply is shrinking due to burns (reduced supply). If a "supply shock" driven by a deepening demand-supply imbalance materialises, the dominant view is that 2026 will be a year when XRP is reassessed as a store of value comparable to Bitcoin.

WATCH: CNBC SAYS "THE HOTTEST CRYPTO TRADE OF THE YEAR IS NOT BITCOIN, IT IS NOT ETHER, IT IS $XRP." pic.twitter.com/moYcx3OtG0