XRP Whale Activity Signals Potential Market Weakness

XRP, the native token of Ripple, is currently under pressure as recent on-chain metrics point to a worrying shift in whale behavior. A significant decline in the flows from large XRP holders may indicate that a market downturn could be on the horizon unless bullish momentum returns to stabilize the asset.

Whale wallets—typically held by investors with substantial amounts of XRP—are rapidly offloading their holdings. This pattern closely mirrors the trend observed earlier this year around February, a period that preceded a notable market reversal after a strong rally. Unless this trend reverses, XRP may struggle to maintain its current support levels and face additional downside.

Whale Distribution Raises Red Flags

According to data from CryptoQuant, shared by an analyst known as The Enigma Trader, XRP’s 90-day moving average of whale flows has dipped sharply into negative territory. This shift underscores a notable outflow of tokens from major holders’ wallets, suggesting growing bearish sentiment among long-term investors.

Such distribution phases, particularly from significant wallets, typically coincide with the conclusion of bullish cycles. The analyst warned that without consistent accumulation from these large holders, the structure of the market could remain fragile for the foreseeable future.

This latest round of selling comes after XRP’s impressive 70% rally in July, during which it briefly climbed above $3.40. This surge, however, appears to have triggered a classic bull trap scenario, with the market pulling back shortly after retail buyers pushed in at elevated prices—a pattern identified in a previous XRP market analysis.

On the blockchain level, XRP’s exchange reserves have declined notably—from 3.02 billion to 2.3 billion since July 24. This trend generally suggests that holders are moving their tokens off exchanges, potentially to hold for the long term. However, the simultaneous lack of accumulation by large investors implies that sellers might still be dominating the market sentiment.

Another critical data point is XRP’s Network Value to Transactions (NVT) ratio, which surged by 44% in just one day. This metric, which compares market valuation to on-chain utility, suggests an increasing disconnect between the token’s value and its actual usage on the network.

Short-Term Gains Mask Structural Fragility

At the time of writing, XRP is trading around $3.30, seeing a daily increase of over 10% and posting a weekly gain surpassing 11%. Over the last two weeks, the asset has appreciated by 7%, with a notable 42% surge recorded in the monthly chart following its July rally. Still, XRP is now more than 15% down from its recent high, reflecting how volatile and reactive the market remains.

Despite these warning signs, a few optimistic developments could positively influence XRP’s trajectory. One of the most significant pieces of news is the growing institutional interest in Ripple’s token. A recent report from South Korea revealed that authorized crypto custodian BDACS has introduced XRP custody services, indicating that institutional players may be preparing for longer-term participation in the XRP ecosystem.

Related: XRP Price: $12M Max Pain for Bears

While current metrics hint at market weakness, XRP’s broader potential isn’t entirely off the table. As institutional frameworks strengthen and new custody services emerge in key regions, Ripple’s native asset could see renewed support from larger entities, potentially stabilizing price action and reversing the current whale-driven slide.