Binance, XRP Scarcity Hits 20-Month Low..."Long-term Held Volume Released"

▲ XRP/AI-generated image

The scarcity index for XRP on Binance, the world's largest cryptocurrency exchange, has plummeted to a 20-month low. As long-term held volumes convert into liquid supply available for market sale, concerns about short-term selling pressure are growing.

BeInCrypto reported on September 30 (local time), citing data from on-chain analytics platform CryptoQuant, that Binance's XRP scarcity index recently plunged to -0.94. This is the lowest figure in 20 months since January 2025. This indicator measures how scarce or abundant the immediately tradable circulating supply on an exchange is compared to the past. The deeper the negative value, the more immediately sellable supply has increased on the exchange. The index, which had soared to 0.77 in July, its highest in approximately two years, has sharply fallen in just two months.

This drop in the index was driven by a change in the nature of the held volume rather than a fluctuation in the exchange's overall holdings. Binance's total XRP reserves have decreased by about 20% since November 2024, but the remaining volume has moved from cold wallet storage to active trading accounts. Non-circulating inventory, previously locked in the exchange's internal vaults, has been released into a liquid state, ready for immediate deployment on the order book, rapidly diluting supply scarcity.

An increase in tradable volume is diagnosed as potentially leading to future selling pressure. The index, which remained at a neutral level at the end of August, has shown a sharp downward curve, accumulating a large volume of sell orders ready to be immediately released into the market. In a situation where the price struggles to break through key resistance levels, increased exchange liquidity acts as a factor that amplifies downward volatility.

However, there are counterarguments that an expansion of liquidity supply on exchanges does not necessarily lead directly to an immediate large-scale sell-off. It cannot be ruled out that the liquidity expansion may have occurred as part of market makers' routine spread provision and arbitrage responses. It is explained that until actual sell orders are executed, it may remain a psychological burden testing the resilience of short-term price support levels.

With the expansion of liquid volume on Binance confirmed, the supply shortage market of July has completely ended. Market attention is focused on whether the decline in the scarcity index, which hit a 20-month low, will lead to a substantial sell-off or transition to price stabilization through liquidity absorption.

[Key Article Summary]

-The XRP scarcity index on Binance plummeted from a high of 0.77 in July to a 20-month low of -0.94.

-While total reserves decreased by 20%, a large volume from cold wallets was converted to an immediately tradable state.

-Amid growing concerns about potential selling pressure, the possibility of liquidity supply simply for market making was also raised.

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