Could a Coinbase XRP Mystery Signal a $5 Breakout?

Coinbase’s XRP reserves have declined by 90% since the beginning of the year, according to internal data and public filings reviewed by Bloomberg. The drop has raised questions among investors about the exchange's strategic use of the asset and its future plans for XRP. Meanwhile, industry analysts and market observers speculate that upcoming moves, including potential ETF applications and increased demand for XRP in treasury management, could drive the token toward a price target of $5 in the near future.

Coinbase, one of the largest U.S.-based cryptocurrency exchanges, has historically maintained a substantial portion of its XRP holdings in its own reserves. These reserves are held as part of the exchange’s liquidity strategy and are occasionally used for market operations or regulatory compliance. However, the sharp 90% drop in reserves since January 2025 suggests a shift in the company’s approach. The reduction may be linked to Coinbase’s broader efforts to divest certain assets in light of evolving regulatory and market conditions.

The decline in reserves comes amid ongoing legal uncertainty surrounding XRP. While the U.S. Securities and Exchange Commission (SEC) has not classified XRP as a security in all jurisdictions, the regulatory environment remains complex and subject to interpretation. This has influenced institutional investors and platforms like Coinbase to re-evaluate their positions. The company has not provided a detailed explanation for the drop, but industry insiders suggest that part of the movement may relate to repatriating the asset for use in cross-border transaction services or treasury operations.

Market analysts have also pointed to potential catalysts that could push XRP toward $5 in the coming months. One of the most anticipated developments is the filing of a potential XRP ETF by one or more financial institutions. While no official filings have been made public yet, Bloomberg Intelligence and other market research firms have noted that a successful ETF approval would significantly boost demand for XRP. An ETF would provide a regulated and institutional-grade vehicle for investors, increasing both retail and institutional exposure to the token.

In addition to ETF speculation, growing demand for XRP in corporate treasury management is another key driver. Ripple, the company behind XRP, has been promoting the use of the asset for cross-border payments and remittances. Several multinational corporations and financial institutions have begun incorporating XRP into their operational workflows due to its low transaction costs and fast processing times. As adoption increases, so does the demand for XRP, which could further support its price appreciation.

Technical indicators also point to a bullish outlook. XRP has recently broken out of a multi-month trading range and is trading near a critical resistance level. Analysts have noted that if the token can maintain its current momentum and close above key technical thresholds, it could see a significant price move in the short term. However, as with all cryptocurrencies, XRP remains highly volatile and subject to sharp corrections if market sentiment shifts.

The potential for XRP to reach $5 is not without challenges. Regulatory scrutiny, market volatility, and the broader macroeconomic climate all play a role in determining the token’s trajectory. Nevertheless, given the current market dynamics—ranging from institutional interest to potential ETF approvals—many investors remain optimistic about XRP’s future. The next few months will be critical in determining whether XRP can sustain its upward momentum or face a pullback due to external pressures.