As the broader crypto market continues to face intense selling pressure due to the prolonged market volatility seen over the past weeks, XRP appears to be seeing rising demand instead.
While its price is also struggling amid the market downturn, onchain data from crypto analytics platform CryptoQuant shows that more tokens are leaving major exchanges instead, which could be interpreted as intense buying.
XRP supply shrinks to 4-year low on Binance
The data shows that XRP reserves on the world's largest exchange by volume, Binance, have dropped to their lowest level since December 2022.
As of October 30, Binance has seen its XRP reserve fall to 2.47 billion XRP from the 2.69 billion XRP it recorded on October 28, marking a sharp decline in its holdings in just two days.
This signals rapid accumulation from traders as it marks a decrease of about 8.18% in the amount of XRP available for sale on Binance, with over 220 million XRP withdrawn in just a two-day period.
While decreases in exchange reserves simply mean a reduction in the amount of XRP readily available for trading, it potentially reduces immediate selling pressure if demand remains steady, thereby providing a bullish outlook for the token.
XRP's falling supply extends to other exchanges
Further data shows that the decrease in the XRP exchange reserve on Binance has coincided with falling XRP balances on several other major crypto exchanges, including Bybit and Bithumb.
The data shows that reductions seen on these exchanges were smaller compared to Binance, as Bybit's XRP reserves dropped from 306 million to 286 million XRP during the same period.
Bithumb, on the other hand, also recorded a decrease of 10 million XRP, with its reserves falling from 1.847 billion to 1.837 billion XRP, down approximately 0.54% during the same days.
While this indicates a broader reduction in exchange-held supply and XRP has remained volatile despite the shrinking supply, it is important to note that lower balances do not always mean that investors are accumulating XRP, which could be the reason XRP has yet to react to the trend.