XRP exchange inflows have surged by a massive $1.2 billion in just one day, raising questions across the crypto market about whether this signals a new bullish trend or a looming sell-off. The sharp increase in XRP reserves on exchanges coincided with a notable price hike that saw the token briefly surpass $3, a milestone it hasn’t touched in years.

The significant rise in exchange reserves surfaced on April 3, when on-chain analytics firm CryptoQuant recorded the net increase in XRP deposit activity. Such a large influx into exchanges is generally interpreted as a bearish signal, as traders usually transfer holdings to exchanges when preparing to sell.

However, XRP’s altcoin status and the unique regulatory backdrop it operates under have many analysts questioning whether this latest move could instead point to accumulation by institutions or positioning ahead of a potential catalyst—namely, the approval of an XRP exchange-traded fund (ETF).

Why the XRP Price Reacted Immediately

Shortly after these exchange inflows were noted, XRP’s price spiked to over $3, triggering speculation about the underlying cause. While some believe it stemmed from coordinated buying from large investors or ‘whales’, others think it could be linked to inside expectations around a favorable ruling or decision from the U.S. Securities and Exchange Commission (SEC).

This year, speculation around crypto ETFs has intensified, especially after the approval of spot Bitcoin ETFs. XRP could be next in line if similar products for other digital assets start gaining ground. The XRP community has long argued that the token is similar in utility and nature to Bitcoin and Ethereum, both of which have paved the way for spot-based financial products.

Mixed Market Sentiment

The market remains divided on whether the $1.2 billion spike in XRP reserves is a bullish sign or a warning shot. On one hand, more tokens on exchanges often indicate an incoming sell-off, as investors may be ready to cash out after a price surge. On the other, strategic traders and institutions could be accumulating XRP to be ready for expected demand if an ETF launches.

Supporting the latter theory is XRP’s long legal battle with the SEC, which has now largely shifted in Ripple’s favor. A positive outcome, or even signs of regulatory clarity, could unlock a significant wave of institutional and retail participation.

Looking Ahead: What Traders Should Watch

For now, traders should closely monitor three crucial elements: 1) continued exchange inflow behavior, 2) announcements from the SEC regarding ETF developments, and 3) any major buying activity from known whale wallets. Combined, these indicators can help clarify the intentions behind the $1.2 billion surge.

Volatility around XRP is commonplace, especially given its controversial history and regulatory saga. Still, the current setup is unique. If the ETF approval scenario plays out, XRP could be on the cusp of a major bullish breakout. However, if reserves were pumped in by sellers hoping to offload at the $3 mark, the market may witness sharp corrections.

Analysts debate whether XRP inflows signal bullish accumulation or a price top.

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

As attention shifts toward U.S. regulatory decisions, XRP remains one of the most watched altcoins in the crypto sector.