As uncertainty and volatility continues to plague the crypto market in the aftermath of the FTX fallout, watching crypto wallet movements has become an even more important aid to help traders decide on whether they should long or short a particular crypto, as coin movements to and from exchanges have become even more frequent and are happening at larger sizes since the FTX event unfolded.
One particular top coin that has seen an increasing number of coin movements is XRP. As most of us are aware, Ripple is locked in a lawsuit with the SEC, with the latter claiming that Ripple has sold XRP as a security illegally. As the lawsuit progresses, Ripple has been seen as having the upper hand even though the outcome has not been decided by the court. Despite the lawsuit having dragged for almost two years, many legal experts have said that the end is near and could come by early next year.
As December approaches and 2022 comes to an end, “early next year” could be only two months away and this makes the recent wallet shuffling even more intriguing. Could these be whales accumulating, or could it be exchanges preparing to relist the XRP token? (for the uninitiated, XRP has been delisted from many exchanges as a result of the SEC’s allegation that it is a security, hence, should Ripple win the lawsuit, XRP would almost certainly be relisted at all these exchanges).
To make an informed guess, we have tracked the way the coins moved to see what kind of movement they could be. Please read on to find out more.
XRP Sees Massive Coin Movements Again
Last Monday, on November 14, whales moved 259.4 million units of XRP in six large sized transactions that occurred at crypto exchanges, Bitstamp and Bitso. According to onchain wallet movement tracker, Whale Alert, while some were internal transfers involving wallets in the same exchange, some of these transactions were from unknown wallets that sent XRP to Bitstamp and Bitso. The positive takeaway was that despite several inflows and outflows, eventually, more XRP tokens were being withdrawn from the two exchanges then were deposited, which meant that whales were net withdrawing XRP into self-custody, which is a bullish sign, as the price of XRP has been recovering steadily and has not been as badly affected by the FTX fallout compared with other coins.
On Tuesday, November 15, whales started getting active again, moving more than 50 million units of XRP out of Bitstamp. This move was done in two transactions spaced one minute apart, the first involving 33 million units of XRP, while the second involved 60 million units of XRP, totaling about $36 million in value.
An internal transfer between two Bitso addresses also occurred on the same day, as 25.6 million XRP worth around $10 million moved from one Bitso wallet to another Bitso wallet.
Then on Wednesday, November 16, XRP witnessed rapid and large movements again, this time at another exchange, Binance. Data from Whale Alert showed that 350 million units of XRP, valued at around $135 million, moved from a Binance wallet to an unknown wallet.
Post the transfer, the Binance wallet still has a balance of 1.32 billion XRP worth over $511 million. This wallet address was activated as far back as 2018, a year after Binance was founded, it could possibly be a common address that Binance uses to custody client tokens, which would imply that a large whale withdrew a big amount of XRP to his personal wallet, likely after purchasing it from the exchange. The other possibility could be that a large whale withdrew some of his own tokens held at Binance to his own self storage.
The latest spate of active XRP transfers has come following similar cases of large transfers of the coin in early November when the price of XRP surged to around $0.50 before the broad crypto market selloff caused by the FTX bankruptcy also dragged the price of XRP down drastically, to a low of $0.32. Now that XRP’s price is slowly on the climb again, these large whale transactions are picking up pace again.
What Could These Transfers Be?
Your guess is as good as ours. However, we would be inclined to think that these are merely transactions involving different whales as when some investors buy, others are selling. As all the transactions involved a crypto exchange, it would seem unlikely that those whales know one another as otherwise, they would have transferred those coins from one another’s wallet directly instead of going through an exchange. Hence, these transactions appear to be benign buying and selling activities at exchanges involving wealthy individuals or corporations with funds to slush around.
The noteworthy observation is that the outflow of the transactions has been larger than the inflow, which means that the buying size has been larger than the selling size. This is a positive sign which means long-term holders are bullish and are withdrawing their XRP for safekeeping or usage more than selling.
As the movements are happening when the price of XRP is moving up, it is a bullish indicator that buyers do not mind paying up more to buy XRP, as opposed to buyers only waiting to buy at lower prices, which signifies reduced confidence in the short-term price trajectory. Based on investor psychology and price action trading, such bullish investor behavior often leads to a rise in price of an asset eventually.
As such, could we be seeing XRP shake away the FTX contagion and rise like a phoenix from the fire? The main risk event, which has been seen by most market participants as a bullish catalyst, is the outcome of the lawsuit. Should Ripple win the case against the SEC, XRP could really be able to shake away the stigma of the FTX scandal. In fact, not just XRP, but the whole of crypto could benefit in the event of a Ripple win, since it would give the SEC a setback in terms of its overarching reach into crypto, which ought more to be under the purview of the CFTC.
The above are the personal opinions of the author and should not be taken as the official view of the Margex platform. They are also not financial advice and should not be construed as a solicitation to trade. Readers are strongly encouraged to do your own research, conduct due diligence, and assess your financial abilities before doing any investment or trading as these activities carry risks. Should you be in doubt, kindly speak with your personal financial advisor.