Traders were extracting their XRP holdings from exchanges and moving into wallets, while at the same time the inflows into XRP ETFs increased to $1.4 billion. Despite the supply running low and the liquidity flowing into the XRP ETF, the price is still at the 2024 levels.
XRP withdrawals spike during February
The market conditions are hostile, and it is getting worse by the day as the war in the Middle East intensifies. As uncertainty is the only parameter that is seen on the horizon, traders are taking precautions.
Even during such adverse conditions, there are some altcoins that are showing resilience. Ripple’s XRP coin is one of the cryptocurrencies that is showing immense resilience.
According to CryptoQuant’s analysis, XRP withdrawals from the Binance exchange spiked up during the past few weeks while the inflow into XRP ETFs (exchange-traded funds) increased.
From the 10K withdrawn on February 21, the withdrawal shot up to 14K a couple of days later and then hit 18K the following day. When traders transfer their holdings from exchanges to wallets, it indicates that they have no intentions of selling their coins in the near future.
As traders pulled out their holdings from the exchange, the XRP reserve on the Binance exchange decreased from above $3 billion to $2.7 billion in just 5 months. When the supply on the exchange drops drastically, the price increases, as the shrink in supply could elevate the demand.
Altcoin liquidity could be concentrated to limited coins
On the other hand, there was a rush of flow into the XRP ETF, which surpassed $1.4 billion. Among the players with exposure, Goldman Sachs is reportedly holding more than 83 million XRP, illustrating the gradual attention that some institutional actors are beginning to give to this asset.
If this trend continues and institutions keep mounting their XRP ETFs, the available liquidity in the altcoin market could concentrate into a limited number of assets.
Despite the shortage in supply on the exchange and the hype building around the XRP ETF, the prices are still consolidating. Being supported at the $1.3 level, the coin is at 2024 levels. However, based on historic data, this support level was a launchpad that initiated giant rallies.
Currently, there is bullish momentum building, as the relative strength index (RSI) indicator is making higher highs and higher lows. With the falling wedge nearing completion, a breakout is on the way, and the XRP prices could reach $1.5 initially and then rise further.
