The digital asset market is witnessing a historic scarcity phenomenon for Ripple’s token during this year’s close. According to Glassnode data, the XRP supply on exchanges dropped drastically to reach 1.6 billion tokens last Tuesday. This figure represents the lowest levels recorded since August of the year 2018. The reduction in available balance suggests low selling intent, which is why the asset’s upside potential is strengthening considerably.
On the other hand, the drop of 2.16 billion units in just sixty days coincides with record outflows to cold wallets. Large investors are accumulating the asset on a massive scale, as they seek to secure their positions before a new cycle. Likewise, this historic fund withdrawal movement reduces immediate selling pressure significantly. Liquidity on trading platforms is being depleted very quickly, in this way the market enters a price discovery phase.
In addition, analysts suggest that exchange-traded funds are draining the available supply on global platforms lately. XRP could soon consolidate as an institutional-grade asset, which is why its financial structure is changing in a fundamental way. Institutional investors prefer to maintain custody of their assets outside of centralized exchanges. The tightening of the available supply prepares a bullish scenario, in this way the foundations for a sustained rally are set.
The consolidation of support at 1.78 dollars defines the asset’s technical future
On the other hand, the price has managed to stay above a critical demand zone throughout the current period. The main support is firmly located at 1.78 dollars, since billions of tokens were acquired at that specific level. In addition, buyers have successfully defended this price range several times. Maintaining this level is vital for the economic recovery, so the market bulls monitor every move with extreme precision.
Likewise, technical indicators show a possible triple-bottom breakout on the weekly timeframe chart. A rebound from this zone could boost the price towards ambitious targets near 3.79 dollars in the near future. Therefore, the current market setup favors long-term holders over short-term traders. Investor confidence remains at high levels for now, which is why the positive trend is expected to continue gaining strength.
Will the supply shock be the ultimate trigger for a new all-time high?
However, the success of this projection depends on the emergence of new bullish catalysts during the next annual cycle. The scarcity of tokens on the trading platforms could force an accelerated increase upon any sudden rise in demand. Nevertheless, if the asset loses the 1.78 dollar support, the hopes for a recovery would diminish. The balance between supply and demand will be key, in this way the final direction of the digital currency will be defined.
Finally, XRP’s transition toward a more mature structural phase seems inevitable given the recent institutional adoption. The massive reduction of the available supply on exchanges is a clear signal of accumulation by market whales. Therefore, the market is preparing to face high volatility with a very limited circulating supply. The coming months will be decisive for retail investors, in this way it will be confirmed if the supply shock is real.
