As the price of Ripple (XRP) trends upward, an analysis suggests that XRP supply on Binance is shrinking. An indicator showing a shortage of XRP volume on the exchange has reached its highest level since 2022, drawing attention to future price movements.

According to overseas crypto media outlet CoinGape on the 5th (local time), XRP was trading at $1.30, up 2.51% on the day. The rise came alongside a broader rally in stocks and cryptocurrencies as concerns eased over potential geopolitical tensions following the U.S. Democratic Party's election victory.

Binance Scarcity Index at 2.1... Highest Since 2022

Citing on-chain data, CoinGape reported that XRP supply on Binance is declining, which could positively impact prices if demand also increases.

According to CryptoQuant data cited by CoinGape, the XRP Binance Scarcity Index rose to 2.1, its highest level since 2022. The index measures how scarce XRP volume is on Binance, with a higher reading indicating shrinking supply on the exchange.

However, CoinGape noted that a rising scarcity index alone is insufficient to conclude that XRP prices will climb, as actual buying demand must increase alongside the supply reduction for prices to rise. In fact, CoinGlass data cited by CoinGape shows no clear recovery in XRP buying demand.

Spot Net Outflows Continue for 6 Straight Days... Whales Withdraw XRP from Exchanges

According to CoinGape, net outflows from the XRP spot market continued for six consecutive days, showing that selling pressure remains stronger than buying pressure even as the broader crypto market rebounds.

Meanwhile, large XRP holders are moving differently from typical selling flows. CryptoQuant data cited by CoinGape shows that whale investors are continuously withdrawing XRP from exchanges.

On the 1st (local time), net whale outflows of XRP from Binance reached 50 million tokens, followed by an additional net outflow of 20 million XRP on the 3rd. Similar patterns appeared on other exchanges: on the 3rd (local time), 23 million XRP flowed out of Gate, and 11 million XRP left Bybit the same day.

CoinGape analyzed that these increasing withdrawals from exchanges could be the cause of the supply shortage on exchanges, though it added that retail investors' buying demand must also rise for an actual price increase to materialize.

Funding Rate at 0.0102%, Open Interest Near $3 Billion... Long Positions Grow

In the futures market, speculative trading demand is picking up again, with traders in the XRP derivatives market betting on price increases.

According to CoinGlass data cited by CoinGape, XRP's weighted funding rate rose to 0.0102%, a notable increase from the 0.0053% recorded on the 2nd (local time). CoinGape explained that this change shows long-position investors betting on an XRP price rise are willing to pay higher costs to maintain their positions.

Binance and OKX also saw growth in long-position accounts, with long/short ratios of 2.52 and 2.94, respectively. CoinGape noted that short accounts outnumber long accounts by more than two to one, though there is a discrepancy between the presented ratios and this explanation.

Open interest is also increasing. According to CoinGape, XRP open interest on Binance rose from $419 million on the 1st (local time) to $539 million at the time of writing, near the highest level in the past month. As the broader crypto market rebounds, funds are flowing into the XRP futures market as well. CoinGlass data showed total XRP open interest across all exchanges rose to $2.99 billion.

Technical Analysis... "Break Above Resistance Could Lead to $1.37, Then $1.48"

Technical analysis suggests XRP's price is approaching a key zone.

According to CoinGape, a descending triangle pattern has formed on the XRP daily chart, with the price moving toward the resistance zone of the triangle's upper trendline. CoinGape analyzed that if XRP breaks above this resistance line, a bullish reversal could be confirmed.

The first target price is $1.37, the 61.8% Fibonacci retracement level. If XRP closes above this price, it could rise toward the next target of $1.48.

Technical indicators also show weakening downward pressure. According to CoinGape, the relative strength index (RSI) shows progressively higher lows and has reached 50 on the daily chart, interpreted as a signal that the momentum of the existing downtrend is fading and potentially supporting a future upward move.

The Chaikin Money Flow (CMF) is also showing progressively higher peaks, currently at 0.14. Based on this, CoinGape explained that buying pressure is outweighing selling pressure in the XRP market.

The Key Is a 'Recovery in Buying Demand'

Despite declining XRP supply on exchanges and bullish momentum in the derivatives market, outflows continue in the spot market. As CoinGape's analysis suggests, whether XRP can break above key resistance and sustain an uptrend depends on an actual recovery in buying demand.

[This article is by no means investment advice. The content may reflect only opinions, so please do not use it as a reference or material for investment decisions. All investments are made at the individual's own judgment, and the final responsibility lies with the investor. This publication bears no responsibility whatsoever.]