XRP has erased all its gains from earlier in the year, falling toward $1.90. Despite this decline, several on-chain and market indicators suggest a potential breakout, largely driven by a sharp drop in the amount of XRP held on exchanges.
XRP Exchange Balances Fall to 1.5 Billion
Market analyst Sam Daodu notes that over recent months, a significant amount of XRP has steadily moved off centralized trading platforms and into long-term storage and institutional custody. On-chain data shows that XRP exchange balances have dropped from about 4 billion tokens in early 2025 to roughly 1.5 billion by late December. This 57% decline marks the steepest annual reduction in XRP exchange supply on record.
Data from CryptoQuant supports this trend, showing shrinking XRP reserves on major exchanges like Binance, where balances continued to fall into early 2026. At the same time, wallet accumulation has increased, particularly among institutional custody accounts.
Daodu argues that with fewer tokens available on exchanges, the same buying pressure that previously led to only minor price moves could now drive gains of 10% to 15% within days. Combined with approximately $1.37 billion in XRP exchange-traded fund (ETF) inflows recorded since November 2025, Daodu believes conditions are favorable for a potential breakout toward the $4 to $5 range, rather than another rally stalling below $3.
Bullish, Base, and Bearish Scenarios
Looking ahead, Daodu outlines three broad price paths for XRP, each tied to how exchange balances and ETF inflows develop.
In a bullish scenario, the altcoin could reach the $4 to $5 range if monthly ETF inflows average $300-$500 million and exchange balances fall below 1.5 billion tokens.
A more neutral outcome would see XRP trading between $2.50 and $3.50. This assumes ETF inflows slow to about $50 million to $70 million per week and exchange balances continue to decline at a steadier pace.
The bearish case depends on the possibility that the supply contraction thesis is overstated. If rapid transfers refill exchange order books, escrow releases increase selling pressure, or ETF demand slows due to tighter macroeconomic conditions, XRP could lose support. In that scenario, prices may fall below $2.00 and revisit the $1.60 level during periods of risk aversion. Prolonged uncertainty could see XRP trading between $1.50 and $2.00 for much of 2026, according to the analyst.
At the time of writing, the altcoin was trading at $1.94, representing losses of 4% and 8% over seven and fourteen-day periods, respectively. This positions the fifth-largest cryptocurrency by market cap 46% below its all-time high of $3.64, reached in July of last year.
Frequently Asked Questions
FAQs Expert Predicts XRP Could Reach 5 as Exchange Reserves Drop 57
Q1 What does this headline even mean in simple terms
A An analyst who studies the cryptocurrency market has made a prediction that the price of XRP a digital currency could rise to 5 They are basing this partly on data showing that the amount of XRP held on major trading platforms has fallen sharply by 57
Q2 Why would a drop in exchange reserves make the price go up
A When large amounts of XRP leave exchanges it generally means holders are moving their coins into private wallets for longterm storage This reduces the immediate supply available for people to sell on the market If demand stays the same or increases while the sellable supply shrinks it can create upward pressure on the price
Q3 Is this prediction a guarantee that XRP will hit 5
A No it is not a guarantee It is a single experts opinion or analysis based on current data Cryptocurrency prices are highly volatile and influenced by many unpredictable factors like regulations overall market sentiment and news Treat this as one perspective not a financial fact
Q4 What is XRP and how is it different from Bitcoin
A XRP is a digital asset and the native currency of the XRP Ledger a blockchain designed for fast lowcost crossborder payments and currency exchanges Unlike Bitcoin which was created as a decentralized digital gold XRP is often positioned as a bridge currency for financial institutions to settle transactions quickly
Q5 What are exchange reserves and why are they important
A Exchange reserves are the total amount of a specific cryptocurrency held in the wallets of centralized trading platforms like Coinbase or Binance Tracking these reserves is important because it gives clues about investor sentiment Falling reserves can signal accumulation and holding while rising reserves can signal an intent to sell
Q6 What are the main risks of investing based on this prediction
A The main risks include
Market Volatility Crypto prices can swing wildly based on news or sentiment