XRP has given back all of its early‑year gains, sliding toward the $1.90. Despite the pullback, several on‑chain and market indicators are pointing to a possible breakout from current levels, driven largely by a sharp decline in XRP held on exchanges.
XRP Exchange Balances Slide To 1.5B
Market analyst Sam Daodu notes that over the past months, a substantial portion of XRP has steadily moved off centralized trading platforms and into long‑term storage and institutional custody.
On‑chain figures indicate that XRP exchange balances dropped from roughly 4 billion tokens in early 2025 to about 1.5 billion by late December. This 57% decline represents the steepest annual reduction in XRP exchange supply on record.
Data from CryptoQuant reinforces this trend, showing shrinking XRP reserves on major trading platforms such as Binance, where balances continued to fall into early 2026. At the same time, wallet accumulation has increased, particularly among institutional custody accounts.
Daodu argues that with fewer tokens available on exchanges, buying pressure that previously moved XRP only marginally can now drive gains of 10% to 15% within days.
When combined with approximately $1.37 billion in XRP exchange-traded fund (ETF) inflows recorded since November 2025, Daodu believes the conditions favor a potential breakout toward the $4 to $5 range, rather than another rally that stalls below $3.
Bullish, Base, And Bearish Scenarios
Looking ahead, Daodu outlines three broad price paths for XRP, each tied to how exchange balances and ETF inflows evolve. In a bullish scenario, the altcoin could move into the $4 to $5 range if monthly ETF inflows average $300-$500 million and exchange balances fall below 1.5 billion tokens.
A more neutral outcome would see XRP trading between $2.50 and $3.50. This scenario assumes ETF inflows slow to roughly $50 million to $70 million per week and exchange balances continue to decline at a steadier pace.
The bearish case hinges on the possibility that the supply contraction thesis proves overstated. If rapid transfers refill exchange order books, escrow releases increase selling pressure, or ETF demand slows due to tighter macroeconomic conditions, XRP could lose support.
In that scenario, prices may fall below $2.00 and revisit the $1.60 level during periods of risk aversion. Prolonged uncertainty could see XRP trading between $1.50 and $2.00 for much of 2026, according to the analyst.
At the time of writing, the altcoin was trading at $1.94. This represented losses of 4% and 8% over seven and fourteen-day periods, respectively. This positions the fifth-largest cryptocurrency in terms of market cap 46% below the current all-time high of $3.64 reached back in July of last year.
Featured image from DALL-E, chart from TradingView.com
