Since February, the amount of Ripple’s XRP held on cryptocurrency exchanges has been steadily declining, a trend that usually signals reduced selling pressure and, in many cases, a price boost. Typically, when the supply of an asset on exchanges drops, it means fewer units are available for immediate sale, which can lead to price increases if demand rises. Yet, despite this favorable shift in XRP’s market dynamics, the cryptocurrency’s price has continued to fall, confounding investor expectations.
Declining XRP Supply On Exchanges
According to data from Santiment, the amount of XRP held on exchanges has decreased by 28% since February 1, leaving only 2.58 million tokens on these platforms. At current prices, this is equivalent to $1.32 million in XRP. A reduced exchange supply is generally seen as a bullish signal because it suggests investors are opting to hold their assets rather than sell, reducing the selling pressure that often drags prices down.
However, the anticipated price surge has yet to materialize. Since hitting a year-to-date high of $0.71 on March 11, XRP’s price has tumbled 24%, now trading around $0.53. This persistent price decline despite reduced exchange-held supply suggests a key factor is missing: demand.
Falling Demand Counters Positive Supply Trend
The lack of significant demand for XRP has prevented the cryptocurrency from benefiting from its reduced exchange presence. Even though fewer tokens are available for sale, the absence of increased buying interest has led to continued price slumps. Ripple’s XRP, despite showing signs of reduced selling pressure, has struggled to gain momentum in a market where buyers are seemingly cautious.
This downward movement in XRP’s price has also impacted the percentage of its supply held in profit. On March 11, over 91% of XRP tokens were held at a profit, but by July 4, this figure had plummeted to a 16-month low of 67.38%. As of the latest data, the percentage has rebounded slightly to 76.79%, indicating some recovery, but the overall trend remains concerning.
From a technical perspective, XRP has been trading within a horizontal channel since mid-July, with support and resistance levels defining its price action. The altcoin briefly broke below its lower support line on September 5, sparking concerns among traders. However, XRP has since started to rally, suggesting a possible retest of the former support.
This retest is crucial to determining the next phase of XRP’s price movement. If demand strengthens and the support holds, XRP could resume its upward trajectory, with price targets of $0.56 and potentially $0.60. On the flip side, if the retest fails and demand remains weak, XRP may see a decline toward $0.46, effectively invalidating the bullish outlook.
What’s Next for Ripple’s XRP?
Despite the steady decline in exchange-held XRP, the token’s price continues to face downward pressure, reflecting the delicate balance between supply and demand. As Ripple’s XRP struggles to regain its footing, the market awaits a resurgence of buyer interest to drive the next upward move.
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For now, XRP’s future hinges on whether the current support levels can hold and whether demand will return in time to fuel a sustainable rally. Without this, the altcoin may continue to underperform, despite a seemingly favorable market structure.
XRP’s price action defies conventional market expectations, leaving investors wondering if the reduced selling pressure will ultimately translate into a long-awaited price recovery—or if further losses are on the horizon.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
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