Amid a prolonged bear market, XRP has presented a unique opportunity for investors, with growing evidence pointing towards a significant supply squeeze. Despite recent price consolidation, a confluence of factors, including widespread accumulation and institutional interest, suggests a quiet but substantial shift in XRP’s market dynamics.
Declining Exchange Supply & Whale Accumulation
XRP’s available supply on exchanges has seen a dramatic reduction, signaling a move towards long-term holding and self-custody. Over the past two months, the amount of XRP held on exchanges has plummeted by 34.18%, with a 29% decline observed since February. This significant drop is corroborated by a sharp decrease in exchange depositing transactions, now stabilizing below 1k, down from 19.4k during the October market crash. Such trends indicate that investors are actively withdrawing XRP from trading platforms. This accumulation trend is largely spearheaded by major market players. Whale activity shows a substantial reduction in XRP being sent to exchanges, suggesting these large holders are either holding firm on their existing coins or accumulating from other sources. Exchange inflows have remained minimal, with outflows consistently dominating the market, further reinforcing the narrative of active accumulation and reduced selling pressure.
Institutional Demand Fuels Supply Squeeze
A pivotal development contributing to the potential supply shock is the emergence of institutional demand through XRP Spot ETFs. These new financial products have garnered considerable interest, recording net inflows since their launch. Total Net Assets for XRP ETFs have surged by $439 million in just two weeks, reaching $687 million. This influx of institutional capital further tightens the circulating supply available on public markets, adding a powerful new layer to the existing retail and whale accumulation trends. These combined forces of retail, whale, and institutional accumulation, alongside a rapidly decreasing supply on exchanges, strongly suggest that XRP is on the brink of a significant supply shock. Should this intensified demand persist, it could pave the way for a substantial price breakout once the current period of consolidation concludes.
