XRP’s supply squeeze builds despite $1B escrow release – Here’s why!
Bullish derivatives positioning faces a reality check as $1 billion in XRP supply unlocks.
Zooming out, 2025 has largely been viewed as a bearish year.
But on a closer look, the story changes. Despite the Q4 FUD, H1 2025 delivered solid gains. As is often the case, it only took one trigger in H2 to kick off a profit-taking cycle, dragging top-caps below key support zones.
Ripple [XRP] illustrates this dynamic clearly.
A 36% drop in Q4 alone wiped out all H1 gains, leaving XRP to close 2025 down 12%. Now, heading into 2026, the routine $1 billion escrow release doesn’t exactly help the setup.
In this context, keeping a close eye on derivatives is a must.
According to CoinGlass data, the XRP/USDT perpetual contract showed a 70%+ long skew at press time, with bulls clearly positioning for upside. Given XRP’s week-long sideways chop around $1.85, this bias makes sense.
This is where the escrow release matters. Typically, 20% of the unlock hits the market.
With longs crowded, the key question is whether this positioning is frontrunning a local bottom or setting up for another flush.
Supply unlock tests whether XRP’s positioning can hold
Despite the FUD, 2025 still shaped up as an inflection year for the asset.
Regulatory clarity with the SEC gave Ripple a clear institutional tailwind. Against this backdrop, the upcoming CLARITY Act could further reinforce the narrative by supporting XRP’s L1 infrastructure and broader adoption.
Notably, that shift is already showing up on-chain.
CryptoQuant data showed XRP’s Exchange Reserves dropping from 3 billion at the start of 2025 to 2.6 billion, with $300 million worth of XRP leaving exchanges in Q4 alone.
Bottom line, XRP’s underlying market looks resilient.
From a technical standpoint, four weeks of sideways chop around $1.80, paired with falling exchange reserves, suggests a supply squeeze building under the hood, even with the $1 billion escrow release hitting supply.
In that context, leaning long makes sense.
Final Thoughts
- XRP’s exchange reserves have fallen, with $300 million leaving exchanges in Q4, creating underlying support despite the $1 billion escrow release.
- Sideways chop around $1.80 and a 70%+ long skew in derivatives suggests traders are betting on upside, possibly frontrunning a local bottom.
