XRP Exchange Reserves were still high at 11.81 billion coins on October 17, despite the decrease in Binance futures open interest by $85.1 million over the last 13 days.
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The discrepancy between the two numbers marks a change in the XRP market, where there has been a decrease in derivatives exposure after the mass liquidation phase, although many coins still sit in the exchanges’ wallets.
CryptoQuant’s on-chain data analyst, CryptoOnchain, revealed that the open interest for XRP derivatives on Binance decreased from $538.1 million on October 4 to $453 million on October 17, representing a 15.8% drop. This drop is a result of $25.7 million worth of XRP long liquidations on October 7 and 8, which occurred due to a drop in price.
Even though the drop indicates low risk exposure, it does not necessarily mean that traders have become bearish in the market. It could be that some traders chose to voluntarily close their positions.
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XRP Exchange Reserves Remain Near a Yearly High
According to CryptoOnchain, the XRP Exchange Reserves total was estimated to have been about 11.81 billion XRP on October 17. It was at the 99th percentile in comparison to the total number of observations in the last year, meaning it was among the highest observations.
Large volumes of XRP Exchange Reserves show that there is a large volume of the token still present in exchanges’ wallets. However, this does not necessarily mean that all tokens will be sold.
High XRP Exchange Reserves differ from low Binance Futures open interest, as derivative positions decrease whereas huge token balances still reside on exchanges.
Large holders sent almost 1.669 billion XRP tokens to Binance within 30 days, while exchange reserves increased by about 84 million XRP from October 12th to October 15th.
Nonetheless, these transactions do not show any selling plans. Large holders can transfer XRP for liquidity or collateral reasons, and reserve statistics may fluctuate based on wallet movements.
High XRP Exchange Reserves signal market supply potential but do not suggest that selling pressure is going to increase.
Binance XRP Open Interest Drops After Liquidations
Open interest is the amount of value that outstanding futures contracts represent. A drop implies that the current open interest is getting liquidated instead of getting replenished with new open interest.
As per CryptoOnchain’s report, XRP had seen its value dip from around $1.52 to $1.29, thereby pressuring the long leveraged positions, leading to forced liquidations.
During the period of October 7-8, the long liquidations of XRP on Binance, Bybit, and OKX were approximately $40.7 million. The spot trading volume on Binance was said to fall by 79%.
The two liquidation figures, $25.7 million and $40.7 million, are from different data sets; hence the discrepancy.
The fall in open interest of $85.1 million does not indicate any real losses.
What XRP Exchange Reserves Mean for Selling Pressure
Low futures open interest levels and high XRP Exchange Reserves imply low derivative risk exposure levels coupled with a relatively high XRP level of reserves.
Low reserve levels might imply the movement of tokens out of the exchange, while high reserve levels may not mean anything about the selling plan.
High reserves along with increased spot selling activity may imply increased selling pressure. But reserves may not determine market directions.
Low open interest levels may reduce liquidation risks, but leverage can be built up soon enough, exposing XRP to quick price changes.
XRP ETF Flows Provide Another Market Signal
Institutional ETF performance gives additional insights regarding XRP demand while XRP Exchange Reserves are high.
XRP ETFs have seen cumulative inflows of almost $1.8 billion, but the pace of inflows has been reduced lately. Net outflows from ETFs amounted to $2.35 million for October 12–16 against inflows of $11.11 million in the previous week.
While this means reduced inflows in the short term, it does not mean the beginning of a trend in institutional demand reduction.
The future direction of XRP will depend on exchange reserves, spot volume, futures open interest, and ETF performance. The decline in XRP Exchange Reserves with increasing spot demand may be a positive sign.
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This article contains market analysis and price predictions. These are not guarantees. Crypto markets are volatile. Always DYOR. Not financial advice.
