XRP’s Rally Faces Challenges from Whale Activity and Exchange Flows: A Cautious Outlook

XRP’s recent breakout rally is encountering hurdles as whale activities and increased exchange flows indicate potential short-term distribution risks.

• Whale inflows and rising spot exchange netflows hint at possible short-term distribution.

• Bullish sentiment and a 33% NVT drop signal stronger on-chain fundamentals.

Ripple [XRP] surged to $2.43 following strong short-term momentum, but exchange activity now suggests potential profit-taking. Whale inflows and centralized exchange netflows have risen sharply, with nearly 440K XRP recorded in a single day.

This behavior often signals a distribution phase after accumulation. Historically, such inflows hint at a shift in sentiment among large holders, especially when price approaches resistance levels.

Although this doesn’t guarantee an immediate correction, the timing and scale of the inflows suggest that traders should proceed with caution.

Source: CryptoQuant

Despite growing signs of profit-taking, sentiment remains broadly positive. Market Prophit data shows crowd sentiment at 0.25 and smart money sentiment at 0.09 — both indicating bullish expectations.

This divergence between sentiment and on-chain flow data creates a mixed picture.

Has XRP broken out for good?

XRP has broken out of a multi-month descending channel, confirming a bullish reversal pattern. However, the token now faces resistance at $2.60, with another ceiling at $3.00.

The recent close above $2.43 strengthens the bulls’ case, especially if buyers maintain control. On the flip side, rejection from these levels could attract short sellers. Therefore, XRP’s structure looks promising, but upside follow-through must be sustained above the breakout.

Until a clear move past $2.60 occurs, traders should watch for potential reversal signals that may emerge in this key resistance zone.

Source: TradingView

A sign of strength or a setup for volatility?

Spot exchange data shows $205.12M in inflows against $195.25M in outflows — a net inflow that hints at increasing sell-side pressure. This shift comes after a period dominated by outflows and self-custody trends, suggesting a potential transition to distribution.

Such changes often precede market pullbacks, especially when large holders start offloading into strength.

Source: CoinGlass

XRP derivatives activity has surged, with a 58.5% rise in volume and a 25.26% spike in Open Interest. Additionally, Options volume increased by 10.95%, and Options Open Interest jumped 13.73%. These figures highlight growing speculative demand and leverage.

While this often supports momentum, it can also lead to rapid liquidations if sentiment shifts.

Setting up for a squeeze or leading the charge?

According to Binance’s Long/Short Ratio, 74.63% of XRP traders hold long positions, compared to 25.37% on the short side. This imbalance shows strong market conviction but also sets the stage for vulnerability. When long positions dominate, a surprise move against the trend can lead to liquidations, increasing downside volatility.

Source: Coinglass

XRP’s Network Value to Transactions (NVT) ratio plunged by 33.14% in 24 hours to 136.01. This drop suggests that XRP’s on-chain transaction volume is growing faster than its market cap — a sign of stronger utility and activity. Lower NVT ratios often indicate healthier network usage, especially during rallies. Therefore, this development adds a bullish undertone to the current technical structure.

Will bullish conviction absorb the distribution pressure?

XRP remains technically strong, with bullish sentiment and improving on-chain utility metrics. However, rising netflows to exchanges and whale activity suggest increasing sell-side pressure. Therefore, while optimism is still dominant, the potential for short-term volatility has increased. A move above $2.60 could restore momentum, but a rejection might reinforce distribution signals. Traders must weigh sentiment against selling pressure in this critical range.