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On-chain data shows that XRP Binance Netflow recently rose to positive levels. Here’s what this could mean for the price of the asset.
XRP investors recently deposited into Binance
As explained by an analyst in a CryptoQuant Quicktake aftera large number of XRP deposit transactions have recently gone to Binance. The relevant on-chain metric here is the ‘Exchange Netflow’, which tracks the net transfers going into or out of a given centralized exchange.
The traditional form of this metric measures the difference between inflows and outflows for the platform, but in the context of the current topic, another version of the indicator is interesting: one that counts the net number of deposit/withdrawal transactions.
When the value of the metric is positive, it means that there are more inflow transfers for the exchange than outflow transfers. Since one of the main reasons why investors deposit on these platforms is for sales-related purposes, this type of trend could be bearish for XRP.
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On the other hand, the fact that the indicator is negative means that withdrawals are dominant on the stock market. Such a trend could be a sign that holders are interested in HODLing in the long term, which can obviously have bullish effects on the price.
Here is a chart showing the trend in the 30-day moving average (MA) of the XRP Exchange Netflow for Binance over the past few years:
As visible in the chart above, the XRP Exchange Netflow for Binance has largely remained within positive territory over the past two years, indicating that investors have been continuously executing withdrawal trades.
However, lately the metric seems to have deviated from the norm as its value has recorded a sharp positive spike. The asset has seen a sharp rally of over 54% in the past week, so it is possible that the traders making the deposits are looking to sell and realize their profits.
The main question now is: is this sale a potential threat to the value of XRP? The indicator currently stands at 470, which indicates significantly more inflows than outflows. Since this is also only the 30-day MA, the peak value will likely be even higher.
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While this high number of inflow transactions may seem like a danger at first glance, in reality it may not be, as it corresponds to activity that comes mainly from retail investors.
Whales do not tend to leave too many transactions as they prefer to move large amounts of money in a single transaction. So when this version of the Exchange Netflow peaks, it is a sign that the small holders are depositing money.
Of course, there could still be some whale transfers happening under these inflows, which could indeed have a negative impact on the XRP price. However, it remains to be seen which of the scenarios is true.
XRP price
XRP has jumped ahead of the rest of the market over the past week with a sharp rally, pushing its price to $1.09.
Featured image from Dall-E, CryptoQuant.com, chart from TradingView.com