XRP, Fund Outflow After Liquidity Reduction..."Now is a Dangerous Time"

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An analysis suggests that the market has entered a 'two-way volatility expansion phase' as XRP spot ETF fund flows weaken and Binance liquidity sharply declines.

BeInCrypto reported on May 4 (local time) that XRP spot ETFs have stopped their three-week streak of fund inflows and have shifted to net outflows, while exchange liquidity has significantly weakened.

According to the report, last week, approximately $35,210 in net outflows occurred from XRP ETFs, ending a three-week consecutive inflow trend. Over the preceding three weeks, a total of $82.88 million had flowed in, indicating increased institutional demand, but this week, the trend reversed, signaling a slowdown in demand.

On a cumulative basis, approximately $1.29 billion in funds have still flowed in, but the weekly net asset value has decreased to around $1.06 billion. This was interpreted as an indicator of cooling institutional investor sentiment in the short term.

During the same period, XRP liquidity on Binance also sharply deteriorated. As of the 30th, the liquidity index dropped to 0.038, marking its lowest level since 2020. This indicates a shallower market depth, meaning that prices can move significantly even with relatively small amounts of capital, according to analysis.

This structure inherently has a dual nature. In a market with thin liquidity, a small inflow of funds can lead to a sharp rise, but conversely, if demand continues to slow, downside volatility can also expand.

Ultimately, XRP is analyzed to have entered an unstable equilibrium phase where both upward and downward possibilities are open, driven by the combination of slowing institutional fund flows and decreasing exchange liquidity.

*Disclaimer: This article is for investment reference only and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*