$1 billion in funds flood into XRP spot ETF, why do institutional investors still see it as a Meme coin

XRP Spot ETF has been performing explosively since its launch in November 2025, accumulating over $1 billion in funds and becoming a hot topic in the crypto market. However, alongside the influx of capital, some institutional investors and analysts remain cautious about XRP’s long-term prospects, even comparing it to Meme coins. This phenomenon of contrasting views reflects deep market disagreements about XRP’s true value.

The Contradiction of Capital Inflows and Skepticism

Retail enthusiasm vs. institutional indifference

The popularity of XRP Spot ETF indicates strong retail market enthusiasm, but this has not been recognized by institutional investors. Brian Huang, co-founder of the trading platform Glider, openly expressed institutional doubts: most large institutions do not consider Ripple-related XRP as a serious project and instead treat it as a Meme coin. This means that the main driver of ETF capital inflows is retail investors chasing gains, rather than strategic institutional planning.

Critical flaws in ecosystem development

Huang’s core concern is the impoverished XRP ecosystem. He pointed out that when examining the builder attention within a16z’s investment landscape, XRP even failed to make the list. This detail is crucial because it reflects a fundamental issue:

The lack of builders means XRP lacks innovative applications and infrastructure support. Although Ripple itself is advancing cross-border payments and digital asset infrastructure, these efforts mainly focus on Ripple’s own business rather than building an open ecosystem.

Disconnection Between Price Rise and Fundamentals

Mismatch between price performance and ecosystem development

From a price perspective, XRP has performed well. The current price is $2.09, with a market cap of $12.695 billion, ranking 4th among cryptocurrencies. Over the past 7 days, it has increased by 3.35%, and over 30 days, by 4.41%. However, these price increases are mainly driven by capital inflows rather than improvements in fundamental ecosystem factors.

Short-term nature of hot money

Much of the funds attracted by the ETF are short-term hot money. According to the latest reports, whale trading activity remains active, but institutional participation is limited. Some whales have established long positions worth $310 million and made profits exceeding $9.4 million, but this more reflects speculative trading rather than confidence in XRP’s long-term value.

Deep-seated Reasons for Institutional Skepticism

Confusing utility with speculation

The core reason institutions view XRP as a Meme coin is that, although Ripple has real use cases in cross-border payments, the necessity of XRP tokens within these applications is not clear. Ripple can advance its business without relying on XRP’s appreciation, making XRP more like an investment asset rather than an ecosystem token.

Insufficient openness of the ecosystem

Compared to blockchains like Ethereum and Solana, which boast vibrant developer ecosystems, XRP Ledger’s openness and attractiveness are noticeably lacking. The small number of developers and weak application ecosystem directly limit XRP’s long-term growth potential. According to Huang, without builders, XRP’s growth will be extremely limited.

Key Variables for the Future

Ripple’s ecosystem expansion plans

According to Ripple’s latest strategy, in 2026, the focus will be on vertical integration, building a complete tech stack including blockchain, RLUSD stablecoin, and Palisade custody services. These initiatives could bring new application scenarios to the XRP ecosystem, but whether they can attract developers remains to be seen.

Possibility of changing institutional attitudes

If XRP’s ecosystem construction makes substantial progress and attracts more developers and innovative projects, institutional investors’ attitudes might change. However, such a shift will require time to verify.

Summary

The popularity of XRP Spot ETF reflects retail enthusiasm and recognition of cross-border payment concepts, rather than a deep acknowledgment of XRP’s fundamentals. The indifference of institutional investors stems from a core issue: insufficient ecosystem development. Price increases do not equate to fundamental improvements, and influxes of hot money do not guarantee long-term value. To truly win institutional confidence, XRP needs to attract more developers and applications through ecosystem building, rather than relying solely on Ripple’s own business progress. The current contradictory situation may persist until XRP’s ecosystem achieves substantial breakthroughs.