XRP Exchange Balances Hit Lowest Level in Nearly Eight Years

XRP balances on exchanges have declined to their lowest levels in nearly eight years, according to data from Glassnode. The supply has fallen to 1.6 billion tokens as of January 2, 2026, down from 3.76 billion in October 2025. This trend has been driven by significant outflows from centralized platforms, with many tokens moving into ETFs or cold storage.

The reduction in exchange balances suggests that holders are not actively selling. Instead, they are locking tokens in long-term storage or institutional vehicles. This behavior has been interpreted as a bullish sign, as it reduces immediate liquidity and potential downward pressure on XRP's price.

Analysts have noted that ETFs are playing a major role in this shift. Over the past two months, U.S. spot XRP ETFs have recorded inflows totaling $1.16 billion, with 750 million XRP absorbed into these products. These ETFs are draining liquidity from exchanges, which could lead to a supply shock if the trend continues.

Why Did This Happen?

Large-scale outflows from exchanges coincided with a sharp drop in exchange-held XRP. On October 19, 2025, the net position change among exchanges reached 1.4 billion XRP, marking the largest outflow in history. This outflow was interpreted as evidence of accumulation by institutional investors, who are moving tokens to secure storage or regulated investment vehicles.

The decline in exchange balances aligns with the launch of XRP ETFs. These products have drawn steady inflows since their introduction in late 2025, with some funds reporting over $64 million in a single week. This indicates growing institutional confidence in XRP as an investable asset class.

How Did Markets React?

Despite the drop in exchange balances, XRP's price has remained in a range between $1.78 and $2.00. As of January 2, 2026, the token is trading near $1.87, consolidating above a key support level that has historically preceded price recoveries.

The market response to these developments has been mixed. While ETF inflows suggest strong demand, the broader crypto market remains cautious. Bitcoin and Ethereum ETFs have seen outflows in recent weeks, while XRP-related products continue to attract capital according to recent reports.

What Are Analysts Watching Next?

Investors and analysts are closely monitoring the pace of ETF inflows and exchange outflows. Some traders believe that XRP's supply is tightening rapidly, with only about 1.5 billion XRP remaining on exchanges. If this trend continues, it could create a liquidity crunch by early 2026.

The next key price level to watch is $2.00. If XRP breaks above this level with increased volume, it could trigger a broader market re-rating. Technical indicators suggest that overhead liquidity is concentrated between $2.50 and $3.20.

Regulatory developments will also play a role. A January 15 markup of the Market Structure Bill could influence the regulatory environment for XRP ETFs. If the bill passes, it could further institutionalize XRP as a regulated investment vehicle.

Market participants are also tracking the impact of Ripple's escrow strategy. On January 2, 2026, Ripple is set to unlock 1 billion XRP, but it is expected to relock a significant portion of the release, limiting the impact on circulating supply. This strategy has historically reduced the volatility associated with corporate token sales.

The broader adoption of XRP through real-world asset tokenization and institutional investment vehicles is also a key area of interest. The XRP Ledger has seen nearly 18% growth in real-world asset activity over the past 30 days, positioning it as a strong competitor in the tokenized finance space.