9 December 2025
A sudden drop in XRP balances on major cryptocurrency exchanges has recently led to speculation about its potential impact on the cryptocurrency's price movement. Analyst Vincent Van Code emphasized that the transfers in question are not purely a result of long-term holders adding to their positions.
Instead, he drew attention to the growing influence of newly launched Spot XRP ETFs (Exchange Traded Funds), which are now absorbing a significant portion of the market activity that previously took place on retail platforms.
Van Code noted that billions of XRP that Binance, Upbit and Kraken Exited, largely flowing into ETF custody wallets. This changes the way the market reacts to buying and selling pressure, as retail exchanges now operate with lower liquidity. When daily trading volume on these platforms averaged in the billions of euros, very large orders were needed to create noticeable price movements.
Now that volume has declined, even medium-sized trades can cause sharp intraday swings. This creates a market environment fundamentally supported by ETF purchases, but increasingly sensitive to smaller sell-offs or sudden bids. Van Code noted that, despite the decline in liquidity on exchanges, high-frequency trading firms have managed to avoid price dislocations. These firms have adapted the arbitrage models used in Bitcoin and Ethereum ETFs and have now also adapted these systems for XRP.
When the ETF price moves above or below the underlying asset, automated trading bots immediately correct the gap. This keeps the markets closely aligned. As a result, XRP remains an attractive buy even during ETF creation events, providing a layer of structural stability even when retail charts are more likely to see sparse peaks and troughs.
According to Van Code, this shift strengthens the long-term outlook for XRP, though the short-term experience may become more uncomfortable for traders. When XRP was enjoying daily spot volumes of $2-3 billion across exchanges, you typically needed over $200 million of concentrated buying or selling to move the price 5-10% in either direction.
Now that volume on exchanges has dropped below $1 billion per day, the situation looks very different. A sell order or resistance wall of around $15 million can now swing XRP by around 12% to 18% in just an hour in these thinner conditions. Fortunately, arbitrage bots offer some semblance of stability.
According to the analyst, XRP is still on track to reach $5. However, until the price adjusts to reduced spot volume on exchanges, traders should be prepared for 20% air pockets in price, where relatively modest buying or selling flows lead to outsized price moves.
Why are XRP balances falling on exchanges?
The decline in XRP balances on exchanges is largely due to the appeal of Spot XRP ETFs, which are now absorbing a large portion of the liquidity and influencing traditional trading platforms.
How does reduced volume affect XRP's price stability?
The reduced volume makes XRP more susceptible to price fluctuations, with smaller transactions now able to have even larger impacts on the price due to lower liquidity on exchanges.
What can investors expect from XRP in the short term?
Investors should prepare for larger price fluctuations. Until the price adjusts to the new trading volume on the exchanges, price movements of up to 20% can be prevented by relatively small buy or sell orders.
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