Coinbase has seen a significant decline in its Ripple (XRP) reserves, a trend that began earlier this summer. Initially, the exchange housed over 60 cold and hot wallets with varying amounts of XRP; however, recent blockchain data indicates that only 10 cold storage wallets now remain, each holding XRP balances above zero.
This dramatic drop in holdings—by approximately 83%, from nearly 970 million XRP in June to about 165 million by September—coincides with a notable decline in demand for XRP on Coinbase’s platform, particularly in the Perpetuals markets. The launch of XRP on leveraged markets by the Chicago Mercantile Exchange (CME) may have contributed to this diminishing interest among traders on Coinbase.
One user expressed disbelief over the rapid depletion of Coinbase’s reserves, noting that the reduction occurred in less than 90 days. XRP enthusiasts, commonly referred to as the “XRP Army,” are hopeful that the shrinking supply will positively influence the altcoin’s price. Currently, the remaining wallets each contain approximately 16.5 million XRP coins.
Despite the dwindling reserves, Coinbase appears to be diverging from the industry trend, as several other major exchanges have been significantly increasing their XRP holdings. Notably, platforms like Bitget, Binance, Bybit, and CME are conducting over $1 billion daily in XRP trading, while Coinbase is struggling to reach a trading volume or open interest of $50 million.
The competition is heating up, especially as other exchanges innovate. For example, Gemini has rolled out an XRP-powered card offering 4% cashback, which is particularly appealing to American customers. This competitive landscape may have prompted Coinbase to reconsider its XRP strategies.
Analysts speculate that Coinbase may have sold off its XRP holdings at the peak price of $3.65 or redirected them to on-chain liquidity environments to sustain competent trading volumes. The behavior of institutional investors could be a factor here, particularly given Coinbase’s collaboration with BlackRock’s Aladdin platform. This partnership might be moving XRP into liquidity corridors, exchange-traded funds (ETFs), or other trust structures, hinting at a potential future demand for self-custodial XRP among significant crypto stakeholders.
Despite the substantial reduction in reserves, it is essential to clarify that Coinbase remains active in supporting XRP trading and custody services. This reserve decline seems to be a strategic move rather than an abandonment of the asset, possibly aligned with a larger institutional appetite or Ripple’s On-Demand Liquidity initiatives.
For XRP investors, the diminished exchange reserves could lead to a tighter supply, potentially fostering price growth if demand increases. However, investors are advised to keep an eye on developments related to BlackRock, ETF announcements, and Ripple’s planned escrow releases for clearer market signals moving forward.
