The XRP balance on Binance hit one-year lows, standing at 2,785,000,000 tokens, after declining from about 2,740,000,000 in October, according to data cited in the reports. The move — a 7.2% drop year-to-date and 3.4% since October — reflects nearly 300,000,000 XRP in outflows and reshapes the exchange’s immediate liquidity profile.
A thinning supply base increases volatility and raises the risk of a supply shock
The main driver behind the decline is the withdrawal of XRP from Binance’s books into private custody and cold storage. Reserve-tracking data cited in the reports show that institutional wallets and “smart money” have shifted holdings off-exchange, reducing the liquidity available for trading.
Spot XRP ETFs are also absorbing circulating supply. Canary Capital’s XRPC debuted with $59M in first-day volume and $245M in inflows, while Bitwise registered $22M in volume and $105M in initial inflows, reflecting sustained institutional demand through regulated vehicles.
Analysts cited in the reports highlight a delay effect in the settlement cycle. They note that the impact of ETF-driven accumulation is not instantaneous, and rebalancing flows are expected to materialize more fully in early 2026.
With fewer tokens available on order books, liquidity thins and execution quality changes. A reduced supply raises the sensitivity of XRP’s price to relatively small inflows, increasing the probability of outsized moves driven by moderate buying pressure.
Derivatives positioning has also cooled. Open interest on Binance dropped to one-year lows and funding rates have turned negative at times, signaling reduced leverage and a lower appetite for directional exposure.
Recent history underscores the fragility of market depth. On Oct. 10, 2025 XRP crashed from $2.70 to $0.77 within minutes before rebounding to $2.46, an episode tied to a $19B liquidation cascade that accelerated the exit of tokens from exchanges.
Binance previously served as a liquidity anchor during regulatory litigation when other platforms delisted XRP. That liquidity cushion has eroded as balances decline and assets migrate to custody.
Off-exchange accumulation combined with ETF-driven demand has materially tightened XRP liquidity on Binance, leaving the market more exposed to volatility and to a potential supply-shock scenario if demand accelerates.