XRP Update: Coinbase’s Cutting of XRP Prompts Shift in Institutional Liquidity Strategy
Coinbase has recently made significant changes to its XRP holdings, reducing them by approximately 83% since June 2025. Data from XRPWallets shows that the exchange previously held 970 million XRP spread across 60 cold and hot wallets. However, as of September 2025, this number has decreased to just 10 cold wallets, with each containing around 16.5 million XRP coins. This sharp decline has been linked to a decrease in demand for XRP in perpetual derivatives markets, particularly after the introduction of XRP in traditional leveraged trading environments by the Chicago Mercantile Exchange (CME).
Analysts believe that this change may have caused a redirection of institutional flows through platforms like BlackRock’s Aladdin, possibly guiding XRP toward liquidity corridors, exchange-traded funds (ETFs), or trust structures. Some industry observers also suggest that this reduction in XRP holdings could be part of a routine wallet consolidation strategy. As a result of this reduction, Coinbase finds itself at a disadvantage compared to its rivals in the XRP derivatives market. Exchanges such as Bitget, Binance, Bybit, and CME handle daily XRP trades exceeding $1 billion, while Coinbase’s combined trading volume and open interest (OI) fall short of $50 million according to real-time data from CoinGlass.
Gemini has also introduced an XRP-powered card that offers 4% cashback, further attracting interest from U.S. investors. This competitive discrepancy may have motivated Coinbase to decrease its XRP reserves, especially when XRP was trading at a peak of $3.65. The move to shift the asset into on-chain liquidity environments aims to enhance trading volume and maintain competitiveness.
Analysts believe that this reallocation may indicate a broader shift in institutional demand for XRP, with a potential increase in scarcity and influence on price dynamics. Despite this strategic maneuver, Coinbase has not completely abandoned XRP, continuing to facilitate trading and custody. Instead, the reduction in reserves appears to align with broader institutional demand or the On-Demand Liquidity (ODL) network, emphasizing cross-border transactions.
While these changes could be beneficial for XRP investors in terms of potentially increasing price due to a tightened supply, uncertainties persist regarding regulatory developments and market trends. The ongoing reshuffling of XRP from centralized exchanges to self-custodial and institutional environments reflects a structural shift in how the asset is managed and traded.
With other major exchanges ramping up their XRP reserves and derivatives volumes on the rise, the market seems to be transitioning toward more diverse liquidity sources. This evolution could decrease reliance on any single exchange and bolster XRP’s utility in cross-border payments and decentralized finance (DeFi) applications. However, price stability in the long run hinges on broader adoption patterns, regulatory clarity, and sustained interest from both retail and institutional investors.
