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Vincent Van Code, a market commentator, has suggested that relatively lower volumes of XRP trades could have a massive impact on the XRP price.
The software engineer revealed this at a time when XRP is witnessing increased market apathy amid the ongoing price downtrend. For context, XRP recently broke below the $2 support after holding above this level for days. Currently trading for $1.99, XRP has collapsed 29.6% over the past three months.
XRP Volume Collapses on Binance
After losing the $2 mark, the bulls have continued to battle toward recovering it but have faced struggles. Amid the market uncertainty, XRP’s volume across exchanges appears to be dropping as well, a trend highlighted by Vincent Van Code.
According to Van Code, who claims to have founded multiple AI startups, XRP’s volume has remained “super low” over the past few days. He pointed out that at the time of his disclosure, the XRP/USDT volume on Binance had collapsed to around $89 million. This is remarkably low, considering the pair hit highs around $3 billion in volume.
Data from the XRP/USDT Binance chart on TradingView confirms this disclosure. Specifically, after the pair soared to a peak daily volume of 125.13 million XRP or around $250 million on Dec. 10, it started seeing massive declines in the following days. By Dec. 12, volume had dropped to 78.09 million XRP worth $156 million.
This drop persisted into the weekend, with volumes on Saturday, Dec. 13, collapsing to 44.2 million ($88.4 million) and 45.16 million or $90 million on Sunday, Dec. 14. It remains to be seen if these figures will improve in the new week.
Similar Trend Across Multiple Exchanges
Importantly, this trend is not unique to Binance, as XRP’s trading volumes across multiple exchanges have also declined recently. For instance, the XRP/USD volume on Bitstamp dropped to 9.62 million XRP on Dec. 14, down from the 37 million XRP peak on Dec. 1. The XRP/USD volume on Coinbase also crashed from 164 million XRP on Dec. 1 to 35.92 million XRP on Dec. 14.
Such low volumes often indicate apathy, as traders step away from the market during market uncertainties. However, it also presents an opportunity for large whales to dictate the flow of the market by using relatively lower capital.
“10M XRP Could Pump or Tank the Price”
Speaking on the ongoing trend, Van Code pointed out how the market remains largely vulnerable to such price swings at its current state. According to Van Code, now that the XRP/USDT volume has dropped to around 89 million XRP, a trader with just 10 million XRP worth $20 million could push the XRP price up with a single buy or drag the price down with a single sell.
Specifically, when trading volume and order-book depth fall, fewer buy and sell orders sit at each price level. In this situation, a large market order, such as 10 million XRP, can move through multiple price levels and push the price sharply higher or lower. Low liquidity increases slippage and magnifies price impact.
However, low volume does not always mean weak liquidity. A deep order book can still absorb large trades. Moreover, Binance alone does not represent the entire XRP market. Liquidity on other exchanges, the use of limit or OTC orders, and the timing of the trade can all reduce or offset the impact.