XRP Supply Signals Potential Rally

What to Know:

• Key takeaway #1 — A key demand zone has provided support for XRP’s price throughout 2025.
• Key takeaway #2 — XRP supply on exchanges has dropped to an 8-year low, signaling reduced selling pressure.
• Key takeaway #3 — Holding above $1.78 could confirm a triple-bottom breakout targeting $3.79.

XRP (XRP) has maintained its position above a crucial demand zone that has consistently supported its price throughout 2025. The decreasing balance of XRP on exchanges may potentially trigger a sustained recovery in 2026. The ability of XRP to hold this level, combined with reduced exchange supply, could signal a positive shift for the cryptocurrency.

XRP Supply Dynamics and Exchange Balances

Data from Glassnode indicates a sharp decrease in the XRP supply held on exchanges over the past 60 days. The XRP balance on exchanges has significantly dropped, reaching levels not seen since August 2018. This reduction in supply on exchanges typically suggests a decreased intention to sell among holders, which can reinforce the upside potential for XRP.

The sharp decline in XRP supply coincided with record exchange outflows, marking the largest spike in history. Such outflows often indicate strong accumulation by large holders, who move tokens to cold storage or investment products, reducing immediate sell-side pressure. Some analysts suggest that ETFs are contributing to this trend by draining XRP from exchanges and tightening liquidity, potentially solidifying its position as an institutional-grade asset.

Critical Support Levels for XRP

XRP’s recent price pullback was halted by buyer activity within a key demand zone between $1.60 and $1.84, which has historically supported the price throughout 2025. Maintaining its position above this support level has often preceded significant recoveries in XRP’s price. According to Glassnode’s UTXO realized price distribution, $1.78 represents the most significant support for XRP, where investors acquired a substantial amount of tokens.

The absence of significant support below this level means that losing it could diminish hopes for an XRP price recovery in 2026. Conversely, a rebound from this zone could confirm a triple-bottom breakout on the weekly timeframe, potentially targeting $3.79. The ongoing battle between bulls and bears at this critical juncture will likely determine the short-term trajectory of XRP.

What Factors Could Influence XRP’s Price Trajectory?

Several factors could influence XRP’s price trajectory in the coming months. Institutional sentiment and ETF flows play a crucial role, as increased institutional adoption could drive demand and reduce selling pressure. Macroeconomic factors, such as interest rate decisions and inflation data, can also impact investor sentiment and risk appetite, affecting the broader crypto market, including XRP.

Regulatory developments surrounding Ripple and the XRP Ledger remain a key consideration, as positive outcomes could boost confidence and attract further investment. Monitoring derivatives data, such as funding rates and open interest, can provide insights into market positioning and potential volatility. Additionally, the overall liquidity of XRP markets will influence its price discovery and stability. A combination of these factors will likely shape XRP’s performance in the near future.

How Do Funding Rates and Derivatives Data Affect XRP?

Funding rates in the derivatives market can provide valuable insights into the prevailing sentiment surrounding XRP. Positive funding rates indicate that long positions are dominant, suggesting bullish sentiment, while negative funding rates suggest bearish sentiment. Monitoring these rates can help traders gauge the likelihood of short squeezes or long liquidations, potentially impacting XRP’s price.

Open interest in XRP derivatives also offers clues about the level of speculation and leverage in the market. A rising open interest suggests increased participation and risk-taking, while a declining open interest may indicate reduced enthusiasm. Analyzing these metrics in conjunction with price action can help traders assess the strength of trends and identify potential reversal points for XRP.

Will XRP See a Sustained Recovery in 2026?

The potential for a sustained recovery in XRP’s price in 2026 hinges on several key factors. Holding above the critical support level of $1.78 is essential, as a breakdown below this level could trigger further downside. A rebound from this zone, however, could confirm a bullish breakout and pave the way for significant gains. Increased institutional adoption and positive regulatory developments could also serve as catalysts for a sustained rally.

Monitoring exchange balances and ETF flows will provide further insights into the supply and demand dynamics of XRP. A continued decrease in exchange supply, coupled with strong ETF inflows, could indicate growing accumulation and reduced selling pressure. Ultimately, a combination of technical factors, market sentiment, and fundamental developments will determine whether XRP can achieve a sustained recovery in 2026.

XRP’s ability to hold above its key support level, combined with declining exchange balances, suggests a potential for price recovery. Monitoring institutional sentiment and ETF flows will be crucial in determining whether XRP can sustain its upward momentum.

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Source: Original article