XRP Rebounds 38% Following Early February Sell-Off as Exchange Balances Drop

XRP has posted a 38% price increase since reaching a monthly low on 6 February, climbing to $1.55 according to market data. The asset has added over 5% in the past day alone, signalling continued buying interest following the broader digital asset sell-off earlier this month.

The recovery has outstripped gains seen in Bitcoin and Ethereum, which have each risen approximately 15% over the same timeframe. Bitcoin was trading near $69,420, whilst Ethereum stood at roughly $2,020 at the time of reporting.

Data from blockchain analytics platform CryptoQuant reveals a notable decline in XRP held on the Binance exchange during the days immediately following the price dip. Between 7 and 9 February, Binance's XRP reserves fell by 192.37 million tokens to 2.553 billion, marking a 7% reduction and the lowest recorded level since January 2024. Holdings have since stabilised.

Market observers typically interpret declining exchange balances as a sign of accumulation behaviour. The reasoning centres on the tendency of investors to move assets into self-custody wallets when intending to hold for longer periods, rather than leaving them on platforms used primarily for trading.

Large withdrawals from exchanges can tighten circulating supply, which in turn may support upward price movement. Historical patterns support this interpretation. XRP rallied from $0.60 to above $2.40 during the final two months of 2024 as balances held on exchanges contracted at an accelerated pace.

The latest price movement comes amid renewed interest in altcoins as traders reassess valuations following the early February downturn. XRP, which is designed for cross-border payment settlement, remains one of the most actively traded digital assets by volume.

Industry Impact and Market Implications

The divergence in recovery pace between XRP and the two largest cryptocurrencies by market capitalisation suggests selective investor appetite during the bounce from recent lows. Altcoins with specific use cases, such as payment settlement, appear to have attracted renewed attention as participants look beyond Bitcoin and Ethereum.

The reduction in exchange reserves may indicate a shift in holder behaviour, with more participants opting for direct custody rather than maintaining balances on centralised platforms. This trend, if sustained, could influence liquidity dynamics on major exchanges and affect price volatility in the near term.

From a broader market perspective, the rebound across digital assets reflects a degree of resilience following the sharp correction earlier in February. However, the sustainability of these gains will depend on several factors, including macroeconomic conditions, regulatory developments, and continued investor confidence in the sector.

For exchanges, declining on-platform balances could signal changing user preferences around custody and security, particularly in the wake of high-profile platform failures in recent years. This may prompt further evolution in how trading venues structure their services and communicate reserve transparency.

The payments-focused nature of XRP also places it within ongoing conversations around stablecoin regulation and cross-border settlement infrastructure, areas where clarity from regulators could materially affect adoption trajectories for utility-focused digital assets.