Expert Forecasts $5 XRP Price As Exchange Balances Plummet By 57%

Overview

XRP has recently retraced its gains from earlier in the year, approaching the $1.90 mark. Despite this downturn, various on-chain and market indicators suggest the potential for a breakout, primarily driven by a significant reduction in the amount of XRP held on exchanges.

XRP Exchange Balances Decline

Market analyst Sam Daodu highlights that a considerable amount of XRP has transitioned from centralized exchanges to long-term storage and institutional custody over recent months. On-chain data reveals that XRP exchange balances have plummeted from approximately 4 billion tokens in early 2025 to around 1.5 billion by late December. This marks a 57% decrease, which is noted as the most significant annual drop in XRP exchange supply on record.

Data from CryptoQuant supports this trend, indicating a continued decline in XRP reserves on major trading platforms, including Binance. This reduction in exchange balances coincides with an increase in wallet accumulation, especially among institutional custody accounts. Daodu suggests that the diminishing availability of XRP on exchanges may lead to heightened buying pressure, which could result in price gains of 10% to 15% within a short time frame.

ETF Inflows and Price Projections

Since November 2025, XRP has seen approximately $1.37 billion in exchange-traded fund (ETF) inflows. Daodu posits that these conditions are conducive to a potential breakout towards the $4 to $5 range, rather than merely stalling below $3. He outlines three potential scenarios for XRP’s price trajectory, each contingent upon the evolution of exchange balances and ETF inflows.

1. Bullish Scenario: In this scenario, XRP could reach the $4 to $5 range if monthly ETF inflows average between $300 million and $500 million, accompanied by exchange balances dropping below 1.5 billion tokens.

2. Neutral Outcome: A more neutral projection would place XRP in the $2.50 to $3.50 range, assuming ETF inflows slow to approximately $50 million to $70 million weekly and exchange balances decrease at a more gradual rate.

3. Bearish Case: The bearish outlook hinges on the premise that the reduction in supply might be overstated. If rapid transfers refill exchange order books, escrow releases increase selling pressure, or ETF demand diminishes due to tighter macroeconomic conditions, XRP could potentially decline below $2.00, possibly revisiting the $1.60 level during periods of risk aversion. Prolonged uncertainty could see XRP trading between $1.50 and $2.00 throughout much of 2026.

At the time of reporting, XRP was trading at $1.94, reflecting losses of 4% and 8% over the past seven and fourteen days, respectively. This positions XRP at 46% below its all-time high of $3.64, achieved in July of the previous year.

From author

The current market dynamics surrounding XRP present a complex scenario. The sharp decline in exchange balances is a noteworthy development, as it could signal a shift in market behavior. The interplay between ETF inflows and exchange supply may dictate XRP’s price movements in the near future, illustrating the intricate relationship between market sentiment and asset availability.

Impact on the crypto market

• A significant decrease in XRP held on exchanges could lead to increased volatility and potential price surges.
• Institutional interest appears to be growing, as evidenced by the rise in wallet accumulation.
• The outcome of ETF inflows may significantly influence market sentiment and XRP’s price trajectory.
• A bearish scenario could create broader implications for market confidence in altcoins, especially if XRP experiences significant declines.
• The current trading levels of XRP suggest a cautious outlook, with potential for both upward and downward movements based on market conditions.