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The amount of XRP held on cryptocurrency exchanges fell by $1.32 billion over the past month, dropping from $7.03 billion to $5.70 billion as the token’s price declined from $2.50 to around $2.08.
The 19% reduction in exchange balances typically indicates traders are moving tokens to private wallets for long-term holding, though analysts say it also reflects reduced market liquidity and heightened caution.
The decline in Xrp exchange reserves suggests traders are either moving tokens off exchanges to long-term wallets or scaling back exposure amid uncertain market signals.
Data shows reserves fell sharply in early November, briefly recovered toward the month’s end, and dropped again in early December.
Exchange reserves are often a mirror of trader sentiment, said Ali Martinez, a senior crypto analyst at IntoTheBlock.
A sharp reduction in Xrp exchange reserves typically indicates lower selling pressure in the short term but also reflects thinning market depth, which can amplify volatility.
Despite global interest in digital assets, XRP’s struggle to hold above the $2 support level underscores the growing fragility in its trading structure.
This comes even as U.S. spot exchange-traded funds (ETFs) continue to record steady inflows—an indication that broader market participants remain cautiously optimistic about crypto exposure.
From a technical standpoint, XRP’s position below its 50-day SMA ($2.30) and 200-day SMA ($2.62) paints a bearish picture for the short- to medium-term outlook.
The Relative Strength Index (RSI) stands at 47.18, indicating a neutral zone with limited momentum for an immediate rebound.
However, analysts believe that the continued decline in Xrp exchange reserves could eventually favor long-term holders.
Lower exchange reserves often signal accumulation phases, noted Michael van de Poppe, CEO of MN Trading.
If XRP can stabilize near $2 and push back above the 50-day moving average, a rebound toward $2.40 is plausible.
This sentiment aligns with historical data where declining exchange reserves preceded notable price recoveries once buying pressure increased.
The drop in Xrp exchange reserves also raises questions about liquidity resilience in the Ripple ecosystem. Liquidity pools and market makers may face tighter spreads, especially if selling continues while reserves dwindle.
A recent Santiment report emphasized that lower exchange reserves typically reflect a mixed environment—where investor confidence in long-term holding rises, but immediate liquidity weakens.
When Xrp exchange reserves decline sharply, we often see reduced transactional volume and thinner order books, the report noted.
Adding to the uncertainty, XRP’s correlation with Bitcoin remains high, suggesting that any renewed BTC volatility could influence Ripple’s price direction.
Despite short-term concerns, analysts believe the decline in Xrp exchange reserves could signal the early stages of market equilibrium.
As traders adjust positions, reduced exchange holdings might ease selling pressure and prepare the groundwork for recovery once market sentiment shifts.
Crypto strategist Rekt Capital commented, The current contraction in Xrp exchange reserves isn’t necessarily bearish. It often precedes consolidation phases where patient investors accumulate before the next breakout.
With XRP holding above $2 for now, traders and analysts will be watching closely for a decisive move above the 50-day SMA to confirm any recovery attempt.
The Xrp exchange reserves plunge has placed Ripple’s native token under renewed scrutiny. With liquidity tightening, moving averages turning bearish, and investor sentiment cautious, the coming weeks will test XRP’s resilience.
A rebound above $2.30 could restore optimism, but sustained weakness may keep the market in consolidation mode into early 2026.
