According to recent on-chain data, large investors in the XRP market appear to be adjusting their positions. Further analysis suggests that if XRP finds a favorable alignment with current conditions, this could be the start of a larger bull rally.
44 million XRP leaves Binance at the end of February
In a Quicktake article on CryptoQuant, market analyst Amr Taha said that there have been recent significant withdrawals of XRP tokens from 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 daily net flows of XRP held by whale wallets across 15 major crypto exchanges (all of which Binance leads in terms of trading volume). Positive readings from the metric indicate that XRP is entering trading; on the other hand, negative net flows signal an influx 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 shared below, where, as of February 27, approximately 44 million XRP tokens were flowing out of Binance’s whale wallet addresses.
It is interesting to note that this event is not a one-off in the month of February, since around 30 million XRP left these same wallets on the 6th of the month.
What this means for XRP price
Increasing net flows on exchanges are often a telltale sign that investors intend to sell their holdings or trade their coins, thereby adding downward pressure to the market. So, when net whale flows trend negative, it means there are fewer bearish intentions among this cohort of investors.
Additionally, when two withdrawals of this magnitude take place in the same month, it clearly suggests that these large market players could in fact be accumulating XRP in equally large quantities. This could also be a sign that, rather than accumulating, these large holders are locking up their tokens for long-term storage.
Based on historical precedent, events like this are often likely to have positive effects on an asset’s price. In the event that net flows are significantly large, the analyst points out that there would be a corresponding reduction in the available supply of XRP.
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 levels persist or increase, the altcoin price would likely follow an upward trajectory.
At the time of writing, XRP is valued at around $1.37, reflecting a 2.9% decline over the past day.
