XRP Liquidity Plunge: Exchange Reserves Hit May 2025 Lows Amid Price Rebound
XRP's liquidity on exchanges just took a nosedive—and traders are seeing a ghost from May 2025.
The Great Withdrawal
Available XRP on trading platforms has cratered, matching a pattern not seen since last May. That's when the digital asset last staged a major rally. Coins are fleeing exchanges faster than a hedge fund manager from a bad quarterly report.
Price Defies the Drain
Despite the liquidity squeeze, XRP's price is clawing its way back up. It's a classic supply shock scenario: less readily available supply often meets steady or growing demand, and prices get a jolt. The market's ignoring the liquidity warning lights—for now.
A Familiar Blueprint
This isn't new. The same liquidity drain preceded the last significant price move. History doesn't repeat, but it often rhymes, especially in crypto where everyone's chasing the same old patterns hoping for a different, richer outcome.
So, is this a bullish signal or a warning siren? Reduced sell-side liquidity can fuel rallies, but it also makes the market fragile. One thing's certain: when exchanges run dry, volatility is never far behind. Just ask anyone who's ever tried to cash out during a crash—if you can find them between their therapy sessions.
XRP’s Spot Liquidity Crashes Even as Price Recovers
In an X post, Dom stated that XRP’s liquidity has “vanished” and is at its lowest level in nearly two years. This came as he highlighted an “interesting dynamic” in the spot orderbooks, noting that a bunch of orders have popped above the $1 level, which has pushed the altcoin into a strong bid skew.
Dom also revealed that this strong bid skew was last observed in May at the $1.70 lows and that the order book is extremely thin all the way back up to $2. His comment about liquidity comes amid the altcoin’s rally to as high as $1.66 yesterday as bitcoin climbed above $70,000.
The analyst also commented on this, noting how the altcoin dumped 16% after it reached this high. He claimed that once the altcoin hit $1.66, crypto exchange Upbit started putting massive amounts of sell pressure on the order books. Dom added that around 50 million XRP was net sold on the market during this period.
Further commenting on this, the analyst stated that the sell pressure looks to be from both retail and institutional investors on the exchange. He noted that there were 12,775 unique size trades, indicating that this was likely multiple entities or a sophisticated distribution. Based on Dom’s comment about the thin liquidity in the spot XRP market, there is the likelihood that the recent rally was driven by activity in the derivatives market.
CoinGlass data shows a 76% surge in derivatives trading volume and a 113% spike in the options trading volume. However, open interest is down over 3%. The long/short ratio is now below 1, suggesting that most traders are still bearish.
A Bullish Setup
In an X post, crypto analyst Egrag Crypto declared that XRP’s setup remains bullish until the market proves otherwise. This came as he highlighted a descending broadening wedge on the 2-week timeframe. He noted that the current candle was shaping to either a Hammer or a Dragonfly Doji.
Egrag Crypto stated that both are reversal candles when they appear after a downtrend, indicating that XRP may be targeting a higher MOVE to the upside. The analyst added that the Descending Broadening Wedge is still intact and that the price is reacting at the lower structure and not breaking it
At the time of writing, the xrp price is trading at around $1.46, down over 5%, according to data from CoinMarketCap.
