Demand for XRP is weakening at the same time across spot exchange-traded funds, futures and overall network activity.

On July 12, local time, blockchain media outlet CryptoSlate reported that spot XRP ETFs posted $7.2 million of net outflows in the week ended July 10, ending a nine-week run of inflows. Global XRP futures open interest also fell from about $3.0 billion in June to around $2.3 billion by mid-July.

The weekly net outflow was among the five largest for spot XRP ETFs this year. However, SosoValue data showed cumulative net inflows held at $1.48 billion, while total assets under management were close to $1.0 billion as of the end of the week. That suggests more of a short-term signal of weaker demand than a complete break in the longer-term trend in flows.

In the derivatives market, deleveraging was more pronounced. CoinGlass data showed global XRP futures open interest fell by about $700 million in a month. On Binance, open interest declined to $399 million on July 10 from more than $500 million in mid-June. Binance's XRP funding rate, meanwhile, jumped 266 percent over a week. That means open positions fell while the cost of maintaining bullish positions rose.

Long liquidations also rose quickly in this stretch. Long liquidations climbed 94 percent from the previous period and were 172 percent above the recent three-month average. Short liquidations fell by more than half. With remaining bullish bets holding on at higher costs, further price declines could be more likely to trigger additional long liquidations.

On-chain indicators showed a similar trend. Santiment said XRPL logged its second-quietest day of the year last week, with active wallets at 25,350. New wallet creation also fell to 2,130, the lowest since November 2024. A brief bout of bargain buying emerged in late June, but the rise in active and new wallets later faded again.

Network activity did not disappear completely. XRPL validator Vet said transactions including source tags rose 28.6 percent and the number of source tags increased 13 percent. Source tags are mainly used to identify customer transactions when exchanges, payments firms and other services share a joint account. That means existing service-based participants are generating more transactions, but it is difficult to say the user base itself is broadening.

CryptoQuant indicators showed the same divergence. The number of transactions rose 3 to 4 percent from the previous week and the previous month, but was about 21 percent below the recent three-month average. Active addresses were also 11 percent below the three-month baseline. The network value to transactions ratio eased somewhat, suggesting usage may move away from a sharp drop phase, but volumes and user participation still failed to recover to long-term averages.

Against that backdrop, the market's focus is shifting to XRPL's institutional expansion. The XRP price has fallen about 5 percent over the past week to around $1.08, but institutions are expanding their use of XRPL as tokenised assets and payments infrastructure. Evernode, an XRP-focused digital asset treasury company, said tokenised real-world assets linked to the network total about $4.0 billion across more than 500 products.

On the technical side, features aimed at institutional demand are also being pursued. The proposed XLS-96 standard would add confidential transfer functionality to multi-purpose tokens. Balances and transfer amounts would be concealed with encryption and zero-knowledge proofs, while validators would be able to verify compliance with supply rules. Issuers could selectively disclose transaction information only to regulators and auditors, while freeze and clawback functions would be maintained.

For institutions, it is important that collateral movement, settlement size and trading positions are not exposed to outsiders in real time. If such features are adopted, they could reduce what banks, asset managers and financial companies have cited as obstacles to handling sensitive transactions on public blockchains.

There have also been real-world use cases. Ondo Finance, Ripple, Mastercard and JPMorgan's Kinexys platform completed a cross-border redemption transaction in May. The tokenised U.S. Treasury asset portion was processed on XRPL within 5 seconds, and dollar settlement moved through Kinexys and JPMorgan's banking network. The case showed that assets recorded on XRPL can be connected to traditional financial infrastructure.

Ultimately, XRPL has entered a phase in which expanded institutional use and weakening market demand are unfolding at the same time. With ETF outflows, shrinking futures positions and stalled wallet growth continuing, a key point to watch in the near term will be whether institutional features such as tokenised assets and confidential transfers lead to a recovery in actual XRP demand and network activity.

Interesting increase in XRP Ledger Apps activity! 28.6% increase in source tag transactions and 13% more source tags on the XRP Ledger, basically more services went online on the XRP Ledger and are used. New wallets participating looks flat for now, tells me existing users are… pic.twitter.com/OCgOMRLwSA