XRP, Fund Outflow After Liquidity Contraction..."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 the XRP spot ETF's fund inflow, which had continued for the past three weeks, has stopped and turned into a net outflow, and at the same time, exchange liquidity has significantly weakened.

According to the report, a net outflow of approximately $35,210 occurred in the XRP ETF last week, ending three consecutive weeks of inflow. Over the preceding three weeks, a total of $82.88 million 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 that institutional investor sentiment is cooling in the short term.

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

This structure inherently has a dual nature. In a market with thin liquidity, even small inflows of funds can lead to a surge, but conversely, if demand continues to slow, downside volatility could also increase.

Ultimately, XRP is analyzed to have entered an unstable equilibrium where both upward and downward possibilities are open, as the slowdown in institutional fund flows and the decrease in exchange liquidity coincide.

*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.*