XRP Liquidity Dwindles: Binance's Futures Buy Volume Plummets from $5.8B to $250M

The price of XRP has dipped below the pivotal $2 mark, a crucial psychological level, as overall market conditions worsen and selling pressure mounts on risk assets. While Bitcoin continues to command investor attention and liquidity, altcoins like XRP are finding it increasingly challenging to attract consistent demand.

Key Takeaways

XRP has dropped below the critical $2 level amid worsening market conditions.
Binance's Taker Buy Volume for XRP has plummeted by 95.7% from July to current levels, indicating a severe lack of buying interest.
The bearish trend in XRP is supported by technical indicators, including its position below key moving averages.
Continued selling pressure and reduced liquidity point to potential risks for XRP and the broader altcoin market.
A recovery for XRP would require reclaiming higher price levels with increased trading volume to signal renewed demand.

According to a report from CryptoQuant authored by Darkfost, the downturn in XRP is not an isolated case but part of a larger trend affecting the altcoin market. Trading activities in both spot and derivatives markets have significantly decreased over the past few months. This slow draining of liquidity indicates a clear withdrawal from speculative trading as investors cut back on exposure to higher-risk assets.

This trend is particularly evident in XRP's derivatives market data. The Taker Buy Volume on Binance, which tracks aggressive buying orders in futures trading, has plummeted to its lowest levels of the year. Following a peak of over $5.8 billion in July, it has dropped to around $250 million—a staggering decline of 95.7%.

XRP Ledger Taker Buy Volume on Binance | Source: CryptoQuant

This sharp contraction reveals a near-total collapse of buying momentum and underscores the lack of confidence among traders.

XRP's Liquidity Decline Indicates Potential Risks Ahead

Darkfost highlights that the broader market environment is pivotal in exacerbating XRP's current decline. Liquidations are rising across cryptocurrency markets, confidence is shaky, and many participants are still feeling the repercussions of the October 10 event. This ongoing tension has lowered risk tolerance, particularly among short-term traders, who typically infuse liquidity during market corrections.

In addition to sentiment issues, altcoins face significant structural challenges. Bitcoin is absorbing the majority of available capital in both spot and derivatives markets. With Bitcoin's dominance still high, the liquidity that would normally flow into altcoins during recoveries remains concentrated in Bitcoin, leaving little room for a broader altcoin market rebound, particularly for XRP.

In this context, XRP's dramatic drop in Taker Buy Volume isn't unexpected. The situation is even more alarming given that this trend is unfolding on Binance, which accounts for a significant portion of global XRP trading. The ongoing decline in aggressive buying on this major exchange highlights the depth of demand erosion.

Moreover, the Taker Buy Sell Ratio has remained negative for the most part, indicating that sellers continue to dominate XRP's derivatives market. Historically, such drastic volume reductions can precede increased volatility.

XRP Ledger Taker Buy Sell Ratio on Binance | Source: CryptoQuant

In the current scenario, the absence of significant buying pressure coupled with ongoing bearish sentiment suggests that the risks of a downturn remain high. Even optimism related to ETFs has been unable to mitigate these underlying weaknesses.

XRP Faces Pressure Below Key Moving Averages

The 3-day price chart of XRP shows a significant loss of bullish momentum and escalating selling pressure. After peaking between the $3.40 and $3.60 range earlier this year, XRP has established a pattern of lower highs and lower lows, confirming a medium-term downtrend. The recent drop below the crucial $2.00 level is particularly noteworthy, as it had previously served as both support and a consolidation zone.

XRP Testing Key Demand Level | Source: XRPUSDT chart on TradingView

From a technical standpoint, XRP is now trading below its 50-day and 100-day moving averages, both of which are trending downward. This alignment strengthens the bearish sentiment and indicates that any rallies are being met with selling rather than being accumulated. The 200-day moving average, which currently falls within the $1.70 to $1.80 range, represents the next significant structural support. A sustained move towards this level could occur if selling pressure continues unabated.

Volume trends further reinforce the perception of weakness. Since reaching a high in August, trading volume has consistently declined, signaling diminishing participation and a lack of interest in buying dips. The notable volatility spike in October was followed by distribution rather than continuation, often indicative of a market peak.

As long as XRP stays below $2.00 and does not reclaim the declining moving averages, the path of least resistance appears to be downward. For a meaningful trend reversal, XRP would need to surpass the $2.30 to $2.50 range with increasing volume, indicating renewed demand rather than mere short-term relief rallies.

Featured image from ChatGPT, chart from TradingView.com