XRP Supply Is Draining at $1 Support - Real Squeeze or False Alarm?

XRP withdrawals are rare, but price still has to confirm

XRP is showing an unusual flow setup: withdrawal transactions hit their highest share in over five years as price retests the $1 to $1.05 area. On July 31, Binance's 7-day withdrawal share reached 55.6%, while deposit share fell to 44.3%, creating an 11.3-percentage-point gap on the venue. That kind of divergence suggests more XRP is moving away from exchange reach, which can tighten the tradable supply near support.

The market still has not confirmed a turn. XRP remains down more than 42% year to date and was trading around $1.06 on Friday, so the broader tape still fits ongoing bear market conditions. Bulls can argue this is where a squeeze often begins: supply tightens at support before sentiment fully flips. Bears can argue that better flows alone do not force a reversal if every bounce is sold into.

Why shrinking exchange reserves matter

The setup shifts from "flows look interesting" to "sellers may have less ammo" because the inventory visible to traders is shrinking. Exchange reserve tracks the total amount held across exchange wallets, and money flow to and from exchange wallets shows whether investors want coins kept within trading reach or moved elsewhere. On Binance, reserves have fallen from 3.05 billion in July 2025 to 2.75 billion now, roughly 300 million XRP removed from that venue.

A thinner book can amplify moves in either direction

Lower reserves do not guarantee a rally. They also represent the ready pool for sellers. The more useful read is simpler: when reserves fall while outflows persist, the immediate supply becomes thinner. In that environment, buyers do not need sellers to disappear; they need less inventory sitting between price and the next clear level.

If XRP remains anchored to the $1 to $1.05 support range and coins keep drifting away from exchange reach, each new buyer can push price further before fresh supply appears. The same mechanics can work against holders if selling pressure returns.

Weak spot demand is still the veto

There is still one condition the market has not cleared. Spot demand stays too weak to confirm a sustained recovery. Supply tightening can help, but it is not enough on its own. Buyers have to show up with real force.

That is why the squeeze thesis still has a simple veto: weak spot demand. Recent coverage says spot market demand remains weak and that this is limiting a confirmed sustained recovery. If coins are leaving exchange reach, that can reduce sell pressure over time. It does not, by itself, force price higher.

The current tape still leans cautious. XRP has returned to a crucial multi-year support level after a steep decline, and the broader tape still aligns with ongoing bear market conditions. A thinner book can coincide with stagnant price because it works both ways. Without stronger spot buying, lower supply may delay the next leg lower rather than guarantee a reversal.

What to watch next

• Bullish confirmation: price holds the $1 to $1.05 zone and spot buying strengthens enough to push XRP through nearby resistance.
• Bearish failure: price breaks support while exchange outflows slow or deposits rise again, signaling the supply squeeze is unwinding.