XRP Supply Shock Looming as Top Exchanges like Binance and Others See Massive $12.4B+ Drop in XRP Reserves

Multiple crypto exchanges, including Binance and Upbit, have witnessed a massive $12.4 billion drop in their XRP reserves over the past week.

This development, revealed by the market analytics platform CryptoQuant, has triggered speculation of a looming supply shock within the XRP community amid the ongoing price consolidation. For context, XRP has maintained a range around $2 since February, but this latest trend suggests confidence might be returning to the market.

Notably, data from CryptoQuant shows that this massive crash in exchange reserves affected most of the large mainstream crypto platforms including Binance, Bitfinex, Upbit, and Bybit, with Binance and Upbit contributing the most volume.

Binance, Upbit See Largest XRP Withdrawals

Specifically, these exchanges have collectively witnessed a drop in their XRP reserve amounting to 5.736 billion XRP since June 18. Interestingly, this figure represents nearly 10% of the current XRP circulating supply of 58.9 billion tokens, confirming the extent of this reserve crash, which occurred in just a week. At the current XRP price of $2.17, the tokens are worth a whopping $12.45 billion.

Of the 5.736 billion XRP, Upbit, which boasts the largest XRP reserve for any centralized exchange, saw the highest drop. Particularly, the South Korean exchange held 6.069 billion XRP as of June 18, according to CryptoQuant. Currently, this figure has dropped to 1.08 billion tokens, confirming that Upbit saw a drop of 4.989 billion XRP. 

Also, Binance, which had 2.855 billion XRP as of June 18, now holds 2.238 billion tokens. This indicates that the exchange saw an outflow of 617 million XRP over the past week. Meanwhile, Bybit witnessed a drop of 127 million XRP, while Bitfinex observed a decline of just 3.15 million XRP.

For the uninitiated, a sharp drop in exchange reserves is often due to mass withdrawals by investors. These withdrawals typically result from investors pulling off their assets from exchanges to store them in self-custodial solutions for longer periods. Importantly, the practice often leads to a drop in selling pressure, a bullish sign.

Community Reactions and Possible Explanation

Interestingly, the broader XRP community has called attention to this trend, with Mr. Xoom, a notable analyst, pointing to the Upbit and Binance withdrawals in a recent disclosure. In response, Remi Relief, a market pundit, suggested that the ensuing supply shock could contribute to an XRP surge to a range of $25 to $75. 

However, it is important to note that such withdrawals could also be triggered by other factors such as cold wallet transfers by the exchanges themselves for security purposes or exploits. Nonetheless, the latter is unlikely, considering that the withdrawals have not been flagged as suspicious.

Our investigations found no large on-chain XRP transfers from these exchanges, and Whale Alert, a whale-tracking resource, has not picked up any large transaction involving XRP in recent times. Also, data from XRPScan shows there have been no significant movements from wallets associated with these exchanges. 

As a result, it is not clear if the massive crash, especially the one involving Upbit’s 4.98 billion XRP, was a glitch or exchange rebalancing effort. Amid the trend, several investors have pointed to XRP’s stagnant price. However, it is important to note that if these were indeed withdrawals, they do not necessarily translate to buys, so the impact on price will not be immediate.