According to the latest data from the chain, large investors in the XRP market seem to be adjusting their positions. Further analysis shows that if XRP finds a favorable match with the current conditions, it may be at the beginning of a larger rally.
44 million XRP will leave Binance at the end of February
In a Quicktake post on CryptoQuant, market analyst Amr Taha stated that there was a recent withdrawal of XRP tokens from Binance, the world’s largest cryptocurrency exchange by trading volume. This breakout trend is based on the Multi Exchanges Daily Whales Netflow metric.
For context, this metric monitors the daily net flow of XRP held by wallets on 15 major crypto exchanges (all of which Binance leads in trading volume). Positive readings from the metrics indicate that XRP is moving to the exchanges; on the other hand, negative net flows indicate the outflow of XRP from these exchanges.
According to the analyst, there has been a significant increase in negative network flow from the Binance platform. This is also reflected in the chart shared below, where around 44 million XRP tokens have moved out of Binance’s whale wallet addresses as of February 27.
Interestingly, this was not a one-time event in February, as about 30 million XRP left these wallets on the 6th of the month.
What does this mean for the price of XRP?
An increase in net flows on exchanges is often a sign of investors’ intentions to sell their assets or exchange their coins, thus adding downward pressure to the market. So, when the shark net trend turns negative, it means there is less bearish sentiment among this group of investors.
Also, when two outflows of this magnitude occur in one month, it is a clear suggestion that these major market players can indeed accumulate XRP in equal amounts. It could also be a sign that instead of accumulating, these large holders are locking up their tokens for long-term storage.
Based on historical precedent, such events often have a positive impact on asset prices. In the case of a significantly large network flow, the analyst notes that there is a corresponding decrease in the available supply of XRP.
This means that there will be less XRP on the market than buyers are currently asking for. Demand exceeding supply is a common economic condition that drives up asset prices. It is then clear that if the current demand level remains or increases, the price of the altcoin is likely to follow an upward trajectory.
At the time of writing, XRP is trading at around $1.37, reflecting a 2.9% decline over the previous day.
