XRP liquidity on Binance has fallen to its lowest level since January 2020.

Blockchain media outlet Cryptopolitan reported on Monday that Binance's 30-day XRP liquidity index fell to about 0.043.

The drop is seen as a sign of shallower trading depth in the XRP market. With less volume available for immediate execution, orders of the same size can have a bigger impact on price. CryptoQuant pointed out that if liquidity stays this low, the market could become more sensitive to sudden price swings. Large orders could have a bigger effect on price, it said.

On-chain data shows the XRP liquidity index rose to 3 to 4 between 2022 and 2024. Trading activity was strong at the time and market volatility was also high. In recent months, however, the index has fallen sharply and has now slid to a five-year low. This aligns with weakening speculative interest in XRP and a decline in new liquidity flowing into the market.

Still, shrinking liquidity does not immediately mean rising selling pressure. Market participants see the current low liquidity as possibly reflecting reduced selling pressure along with an overall slowdown in trading. XRP has stayed weak in recent weeks, but tighter liquidity on Binance could widen price moves even on small trades.

XRP holdings on Binance have also fallen. Exchange reserves declined to about 2.7 billion XRP recently from about 3.0 billion XRP when XRP traded above $3, marking the lowest level in three months. With less supply waiting on the exchange, it is interpreted as meaning short-term sellable supply that can come to market immediately has also decreased compared with before.

The market has also been watching wallet movements by Chris Larsen (크리스 라슨), Ripple's co-founder and chairman. XRPSCAN said on Sunday that wallets linked to Larsen became active again after pledges to donate to U.S. midterm election campaigns. Larsen pledged to donate $3.5 million to support Alex Bores, a New York Democrat, and is also reported to plan to support Gavin Newsom's moves toward a 2028 presidential run. The transactions were not large, but the market focused on the resumption of wallet activity itself.

Larsen is estimated to hold about 2.58 billion XRP, worth about $3.5 billion at current prices, across 8 addresses. There is precedent for large XRP transfers by wallets linked to Larsen coinciding with price volatility, and the market is watching the renewed wallet activity closely.

Institutional-side changes also remain. CME Group is preparing to begin 24-hour, seven-days-a-week trading in cryptocurrency futures, including XRP-linked derivatives, from Friday. If implemented, existing trading-hour constraints would be removed and liquidity flows could improve across weekends and global trading hours. CME Group's XRP futures product introduced earlier has already drawn institutional participation. Attention is on whether a shift to continuous trading will bring further changes in price discovery and trading activity.

XRP Liquidity on Binance Falls to Its Lowest Level Since January 2020 “Liquidity at these low levels could make the market more sensitive to sudden price movements, as large orders may have a greater impact on price.” – By @ArabxChain Link ⤵️https://t.co/ugoh9111zo pic.twitter.com/oMYPDDzvtV