According to recent on-chain data, major investors in the XRP market appear to be adjusting their positions. Further analysis suggests that if XRP finds a favorable alignment with current conditions, it could be at the beginning of a larger upside rally.
44 million XRP will leave Binance at the end of February
In a Quicktake post on CryptoQuant, market analyst Amr Taha says shared that there have recently been large withdrawals of XRP tokens at Binance, the world’s largest cryptocurrency exchange by trading volume. This outflow trend is based on the Multi Exchanges Daily Whales Netflow metric.
For context, this metric monitors the daily net flows of XRP held by whale wallets on 15 major crypto exchanges (all of which lead Binance in trading volume). Positive readings from the metric indicate that XRP is entering the exchanges; on the other hand, negative net flows indicate an outflow of XRP from these exchanges.
According to the analyst, there has been a significant increase in negative net flows from the Binance platform. This is also reflected in the chart below, where approximately 44 million XRP tokens flowed out of Binance’s whale wallet addresses on February 27.
Interestingly, this event was not a one-off in the month of February, as approximately 30 million XRP had left the same wallets by the 6th of the month.
What this means for the XRP price
Increasing net flows on exchanges are often a telltale sign of investors’ intent to sell their holdings or redeem their coins, putting bearish pressure on the market. So if the net flow of whales is trending negative, it means there is less bearish intent among this investor cohort.
When two withdrawals of this magnitude occur within the same month, it is a clear suggestion that these major market players could be accumulating XRP in equally large quantities. It could also be a sign that, instead of accumulating, these large holders are locking up their tokens for long-term storage.
Based on historical precedents, such events often have a positive effect on the price of an asset. In the event that the net flows are significantly large, the analyst points out that there is a corresponding reduction in the available XRP supply.
This means that there would be less XRP in the market than is currently demanded by buyers. Demand exceeding supply is a typical economic situation that drives up the price of an asset. It then becomes clear that if current demand continues or increases, the altcoin’s price will likely follow an upward trajectory.
At the time of writing, XRP is valued at around $1.37, reflecting a decline of 2.9% in the past day.