Mike Fay Says XRP Price Is Driven By ETFs, Not Network Usage

• Analyst Mike Fay says XRP price is driven by ETFs, not network usage.
• XRP Ledger activity and fees declined sharply in 2025 despite stablecoin growth.
• XRP ETFs attracted billions in inflows, helping sustain the token’s valuation.

XRP price is being supported mainly by exchange-traded funds and investor inflows rather than growth in network usage. That assessment comes from a recent analysis by Mike Fay, a contributor to Seeking Alpha.

ETF Demand Offsets Slowing Network Activity

Mike Fay’s analysis points to ETF demand as a major factor supporting XRP’s valuation. Notably, spot XRP ETFs launched in the U.S. in November 2025 and have since attracted billions of dollars in assets.

The Canary Capital fund was the first XRP ETF, launching on November 13. It currently ranks highest by assets under management (AUM), with $392.75 million. The Bitwise XRP ETF, which launched a week later, ranks second and holds about $309.6 million in AUM. Franklin XRP ranks third, with $287.85 million in AUM. 

Related: Why Wall Street Is Paying Attention to XRP? A Brief On Market Sentiments

XRP attracted nearly $3.7 billion in net investment inflows during 2025, ranking third among digital assets behind Bitcoin and Ethereum. Total investment exposure stood just below $3.6 billion entering the first week of 2026, despite small outflows early in the year.

As of this press time, the cumulative net inflow of XRP ETFs stands at $1.2 billion after a $40.8 million net outflow yesterday, January 7. This marked the first negative inflows in 2026. As such, XRP ETF’s total net asset sits at $1.53 billion. 

On-Chain Metrics Show Yearly Declines

While ETF inflows remained strong, XRP Ledger activity declined over the same period. According to data cited by Fay, daily active addresses fell nearly 27% year over year in the fourth quarter of 2025. Quarterly figures showed about 21,700 active addresses, down from nearly 30,000 a year earlier.

Transaction volume declined less sharply, falling about 12% year over year. Network fees dropped more steeply. Fees generated during the fourth quarter fell to roughly $129,000, down from nearly $600,000 in the previous quarter. Total fees for the entire year reached about $2.3 million.

Fay highlighted fees as a key measure of economic activity, noting that they reflect actual demand for blockspace rather than speculative interest.

Stablecoin Growth Remains Limited in Scale

The XRP Ledger recorded strong percentage growth in stablecoin activity during 2025. Stablecoin transfer volume reached about $1 billion in the fourth quarter, up nearly 500% year over year. Stablecoin supply on the network also increased during the period.

Despite that growth, XRP Ledger’s share of global stablecoin transfer volume remained small. Total stablecoin transfers across blockchains reached nearly $19.7 trillion during the quarter, leaving XRP Ledger with a market share of less than 0.01%.

XRP Valuation and ETF Structure Risks

XRP’s market capitalization hovered around $136 billion during the period analyzed. Fay noted that valuation metrics such as market value-to-realized value remained above historical averages, indicating prices exceeded the realized cost basis of holders.

He also flagged risks tied to ETF structures. Unlike spot crypto markets, ETFs trade only during market hours. That limits investors’ ability to respond to price moves during weekends or overnight sessions.

Fay concluded that XRP’s price performance has increasingly depended on investor flows rather than network usage. While ETFs offer regulated access and liquidity, on-chain data shows limited growth so far. Whether network activity can catch up with market expectations remains a key question as 2026 unfolds.

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