Ripple’s XRP has seen a significant decline in the amount of tokens held on exchanges, dropping 28% since February and hitting a seven-month low. Typically, a reduced supply of a cryptocurrency on exchanges indicates lower selling pressure, which can create favorable conditions for a price increase. However, despite this trend, XRP’s price has continued to decline, defying expectations.
XRP Supply Drops, But Price Fails to Respond
As of now, there are 2.58 million XRP tokens on exchanges, valued at approximately $1.32 million at the current market rate. According to data from Santiment, this amount represents a 28% decrease since February 1. A reduced supply of XRP on exchanges suggests that investors are choosing to hold onto their tokens rather than sell them, which usually lowers selling pressure and can drive prices up.
However, for a price increase to materialize, a corresponding surge in demand is necessary. In the case of XRP, this demand surge has not occurred, despite the reduced supply on exchanges.
XRP Price Performance: A Contradictory Trend
XRP reached a year-to-date high of $0.71 on March 11. Since then, the token’s value has fallen by 24%, with the current price sitting at $0.53. This decline has also impacted the percentage of XRP’s total supply held in profit. On March 11, 91.21% of XRP’s supply was in profit, but as the price fell, this percentage plunged to a 16-month low of 67.38% by July 4. Fortunately, there has been some recovery, with the percentage now at 76.79%, according to Santiment.
Price Analysis: What Lies Ahead for XRP?
Examining XRP’s price movements on the one-day chart reveals that the altcoin has been trading within a horizontal channel since July 17. This pattern, characterized by the price moving within a set range, has seen the upper line act as resistance and the lower line as support. XRP’s price dipped below the channel’s lower support line on September 5, but it has since begun to rally, suggesting a potential retest of the former support.
For XRP to maintain this upward trajectory, the retest of the support line must hold strong, with sufficient demand to push prices higher. Should the retest prove successful, XRP could resume its uptrend with price targets of $0.56 and potentially $0.60. Conversely, if the retest fails, the price could decline further to $0.46, invalidating the bullish outlook.
This situation underscores the unpredictable nature of the crypto market, where reduced supply does not always guarantee a price surge, especially in the absence of strong demand. As XRP continues to navigate these dynamics, investors will be closely watching whether the token can capitalize on the reduced exchange-held supply and turn the corner toward recovery.
