XRP Trend Reversal Ahead? Four Indicators Suggest Bottom Is In

• XRP has continued to recover after hitting a 15-month low of $1.12, and now, exchange supply has dipped to a five-year low suggesting long-term hodling.
• ETFs continue to record steady inflow, and negative funding points to a short squeeze in an oversold market.

The crypto market started February with one of its biggest value wipeouts in years. XRP wasn’t spared, hitting its lowest price in over a year at $1.12 in the first week of the month. However, since then, it has recovered nearly 50% of its value, gaining 7% in the past seven days to trade at** $1.46** at press time. February has historically been a bearish month for XRP. In 7 of the last 11 years, the token has ended the month on a net loss. Some of the analysts who had projected a breakout year for the token have revised their predictions; the latest is Standard Chartered, which has slashed its projection from $8 to $2.80, as we reported. However, the token could break the curse this year, and the bounceback from its 15-month low is a sign that bulls could be taking control of the market. One of the indicators of a trend reversal is the stablecoin footprint on XRPL. Since the turn of the year, the stablecoin volume on the network has risen steadily, gaining 36.7% to hit $417 million at press time. Stablecoin volume shows that users are exploring the network’s decentralized applications, which eventually increases the demand for the native token. Just as important as the volume is the activity. Volume alone shows money is parked in the network, while activity shows that users are utilizing the network for transactions. In the past month, stablecoin activity hit $1.2 billion, increasing by more than 50%. XRP Supply on Exchanges at 5-Year Low Beyond the stablecoin volume and activity, XRP’s net flow on exchanges points to a trend reversal. Since December 2024, the supply of the token on exchanges has been dropping, and this figure is now at its lowest point since early 2021. Decreased exchange reserves point to a market where holders are not looking to dump their tokens, which greatly limits the selling pressure on the token. On Binance, the exchange reserves stood at 2.57 billion XRP this week, the lowest it has been since January 2024, data from CryptoQuant shows.

Image courtesy of CryptoQuant.

“In summary, reserves are declining while price remains near the lows. This structure increases the probability of a potential short squeeze scenario ahead,” concludes CryptoQuant. XRP funding rates also point to a market that has found its bottom. In crypto, positive funding rates shows more traders are leveraged long and are willing to pay to hold their longs. On the other extreme end, very negative rates show a collapse of long positions, which usually precedes a rebound as leveraged shorts are forced to cover their positions. On Binance, XRP’s funding rate hit -0.028% when the price dipped earlier this month and it has yet to recover.