A sudden one decline in XRP balances major crypto exchanges have sparked speculation about how this could impact the cryptocurrency’s price action. The move was highlighted by analyst Vincent Van Code, who explained that the transfers are not simply a sign of long-term holders snapping up the supply.
Instead, he pointed to the growing influence of recently launched Spot XRP ETFs, which now absorb a significant portion of the market activity that once took place on retail platforms.
The demand for ETFs drains liquidity from the stock markets
Van Code noticed that billions of XRP leaving Binance, Upbit and Kraken are largely flowing into ETF custodial portfolios. This changes the way the market responds to buying and selling pressure, as retail exchanges now operate with thinner liquidity. When daily trading volume on these platforms averaged around billions of dollars, very large orders were needed to create noticeable price movements.
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Now that that volume has shrunk, even medium-sized transactions can be executed can cause sharp intraday swings. The effect is a market environment that is fundamentally supported by ETF purchases, yet increasingly sensitive to smaller sell-offs or sudden bids.
Even as the liquidity of the currency decreases, Van Code noted that high-frequency trading firms prevent price dislocations. These groups have already mastered the arbitrage models used in Bitcoin and Ethereum ETFs, and they have now adapted the same systems for XRP.
Whenever the ETF price drifts above or below the underlying asset, the bots immediately correct the gap, keeping both markets closely aligned. This mechanism ensures that XRP is still purchased during ETF creation events and provides a layer of structural stability, even though retail charts may experience more frequent peaks and troughs.
What this means for XRP’s approach to new price highs
According to Van Code, the long-term picture for XRP is strengthened by this shift, even if the short-term experiences for traders may become more uncomfortable. When XRP was seeing daily spot volumes of between $2 billion and $3 billion on the exchanges, you would normally need more than $200 million in concentrated buying or selling to push the price 5% to 10% in either direction.
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Now that stock market volume has fallen to levels below $1 billion per day, the equation looks very different. A sell order or resistance wall of around $15 million can now send XRP up around 12% to 18% in an hour in these thinner conditions. The saving grace, however, is these arbitrage bots.
According to the analyst XRP is still on track to reach $5. However, until the price adjusts to the reduced spot volume on the exchanges, traders should be prepared for air pockets of up to 20% in price, where relatively modest buying or selling flows can cause excessive moves.
Featured image of Peakpx, chart from Tradingview.com