XRP Outflows to ETFs Impact Exchange Liquidity and Price Stability

A significant decrease in XRP balances on major crypto exchanges has sparked discussions about potential impacts on price movements. Analyst Vincent Van Code attributes this change to the influence of newly launched Spot XRP ETFs, which are drawing liquidity away from retail platforms.

Key Points:

Billions of XRP have moved from exchanges like Binance, Upbit, and Kraken into ETF custodial wallets, affecting market liquidity.
This shift means smaller trades can now cause sharp price swings, unlike previous conditions where large volumes were needed for noticeable impact.
High-frequency trading firms are mitigating these fluctuations by using arbitrage models adapted for XRP, similar to those for Bitcoin and Ethereum ETFs.

Market Implications:

The long-term outlook for XRP is positive despite short-term volatility due to reduced on-exchange volumes, now below $1 billion daily.
Trades as small as $15 million can cause significant price changes, with potential swings between 12% to 18% within an hour.
XRP remains on track to potentially reach $5, but traders should anticipate possible 20% price fluctuations due to lower spot volume.

XRP