Since June, XRP has been on an upward trajectory in terms of liquidity. This liquidity has continued to maintain high levels even after the euphoria of the Ripple victory over the US Securities and Exchange Commission (SEC) has worn off, which could be bullish for the XRP price.
Liquidity Remains Very High
A new report from cryptocurrency market data provider Kaiko has shown that the XRP liquidity remains at incredibly high levels compared to where they were three months ago. The initial spike had been observed in mid-July when Judge Analisa Torres had given her landmark judgment in the Ripple vs. SEC lawsuit.
However, unlike the volume which had crashed quickly in the following weeks, the liquidity continued to maintain predominantly high levels. In its initial jump, the liquidity rose over 100%. And while it has dropped from its 2023 peak, it continues to maintain a 50% rise from the pre-judgment levels.
Kaiko’s report points to market depth rising 33% from the $6 million observed in June to the $8 million observed in September. Market depth refers to the ability of a cryptocurrency to be able to handle large orders without a substantial impact on the price.
XRP Liquidity remains high | Source: Kaiko
This increased liquidity also comes in handy as Ripple prepares to welcome institutional investors to the fold. Its acquisition of Fortress Trust has seen the crypto firm acquire over 30 money transmitter licenses. Additionally, the acquisition opens the floodgates for institutional investors to hold XRP, whether temporarily or permanently, as they use Ripple’s ODL increasingly.
What This Could Mean For XRP Price
In any asset, especially digital assets, the depth of liquidity is very important to investors. This is because more liquidity means that investors can easily cash out when needed without running into issues, and this is why it is bullish for the XRP price.
With institutional investors expected to increasingly use XRP, the deep liquidity serves as another advantage for them to use the digital asset. Higher liquidity also means lower volatility, and with more demand expected from large players, the XRP price is likely to go up.
Increased demand from investors is also playing out in real-time as the 0.01% of XRP holders (those holding at least 5.755 million tokens) has risen to 478. Additionally, the daily trading volume is sitting above $1 billion, suggesting a very healthy level of participation from investors.
Presently, the XRP price is sitting at $0.5165, a 1.73% increae in the last day. While the price might be low now, rising demand could soon see the digital asset’s price rally once more.
XRP holds bears at bay at $0.51 | Source: XRPUSD on Tradingview.com