XRP reserves on centralized exchanges dropped to 1.6 billion tokens in late December, the lowest level since 2018. Analysts say low exchange balances alone may not trigger price pressure or sustained rallies.
Exchange holdings fell from 3.76 billion on Oct. 8, 2025, to 1.6 billion by late December.
What Happened: Exchange Balance Decline
Data from Glassnode shows the sharp reduction coincided with Ripple's routine release of 1 billion XRP from escrow on Jan. 1, 2026. However, historical trends suggest declines in exchange reserves do not automatically lead to price surges.
In late 2018, XRP reserves were at similar lows, yet prices continued trending downward. At the end of 2022, a significant reserve drop failed to trigger a rally until late 2024.
"While attention stays on price, the real change is happening in the background… liquidity is being removed. The market becomes thinner, more sensitive, and far more reactive to demand," said Web3Niels, a market analyst.
Also Read: Roundhill's Income-Focused XRP ETF Could Launch As Early As Jan. 29
Why It Matters: Data Limitations
The supply shock narrative has faced scrutiny due to incomplete data coverage. Glassnode tracks roughly 10 exchanges, but analyst Leonidas expanded coverage to 30 platforms, finding approximately 14 billion XRP held across exchanges in late 2025.
"Glassnode's chart only shows data from 10 exchanges, and only from wallets they've linked to those exchanges… Gathering data from more exchanges, especially the ones holding billions of XRP, would better reflect reality and any possible trends," wrote Leonidas.
This discrepancy highlights the challenge of relying on limited exchange data.
XRP's high liquidity means tokens can be quickly moved on and off platforms, making static reserve numbers less reliable as predictors of market behavior.
"XRP listed on orderbooks for sale is dynamic… sometimes $10M buying can push price higher and sometimes $100M buying doesn't stop price from going down," wrote analyst Vet_X0. Factors such as XRP ETF inflows, institutional adoption and U.S. regulatory developments may influence XRP demand more significantly than fluctuations in exchange reserves.
Read Next: Beckham-Linked Health Company Stops Bitcoin Acquisitions Following Late-2025 Market Correction