Expert To XRP Holders: I’ve Got Uncomfortable News For You

As market participants anticipate a potential surge in XRP’s value, several industry analysts have cautioned that offloading XRP during a major rally may prove more difficult than many investors expect. The concern centers on the likelihood of declining liquidity during rapid price movements, which could restrict sellers from executing large transactions at their desired prices.

Limited Liquidity Could Hinder Profit-Taking

Jake Claver, Chief Executive Officer of Digital Ascension Group, recently addressed this issue in a statement, emphasizing the need for investors to prepare for the operational realities of major market events.

According to Claver, when XRP begins to experience substantial upward momentum, many exchanges may struggle to maintain sufficient liquidity to handle the surge in sell orders. He explained that such a situation could create a temporary imbalance between buyers and sellers, with demand for liquidity far exceeding what exchanges can provide. This, he warned, would allow institutional investors, who often conduct over-the-counter (OTC) transactions, to dominate the market, while retail traders could find themselves unable to sell at optimal prices.

Claver advised XRP holders to prepare in advance by securing their assets in private wallets, developing a clear tax strategy, and planning for long-term wealth management. He noted that investors who fail to make these preparations could miss out on opportunities to maximize their returns during a potential price breakout.

Analysts Explain Why Selling at Target Prices May Be Unlikely

Market commentator Diana echoed Claver’s position in a separate discussion, stressing that many XRP investors have unrealistic expectations about how liquidity functions during rapid rallies. She observed that a large number of holders intend to sell once XRP reaches specific price targets, such as $10. However, if too many traders attempt to sell simultaneously, market depth can quickly thin out, resulting in significant price slippage.

Diana explained that in such cases, a trader placing a sell order at $10 might only receive an execution price closer to $8.50 or lower, depending on market conditions and trade size.

This discrepancy can cause substantial losses within seconds during periods of high volatility. She noted that this phenomenon is not unique to XRP but tends to be more pronounced when market participation becomes heavily one-sided.

Institutional Activity May Further Reduce Market Liquidity

Diana also pointed out that institutional trading practices contribute to this challenge. While most retail participants rely on public exchanges such as Coinbase or Kraken, major corporations and financial institutions typically transact through private OTC arrangements. These private trades, though essential for large-scale settlements, effectively draw liquidity away from public exchanges during critical market moments.

Additionally, Diana highlighted Ripple’s recent acquisition of GTreasury as a factor that may further tighten XRP’s available liquidity. The $1 billion integration of GTreasury is expected to increase the use of XRP within institutional payment systems, reducing the volume of tokens circulating on traditional exchanges. While this development enhances XRP’s utility and strengthens its role in global payments, it could also limit retail investors’ ability to exit positions efficiently when prices rise sharply.

Both Claver and Diana urged investors to prepare before any significant rally begins. Their recommendations include moving assets from centralized exchanges to private wallets, establishing pre-set sell targets, and using limit orders rather than market orders to mitigate potential slippage.

Analysts agree that although optimism around XRP’s long-term prospects remains strong, traders must be proactive in managing liquidity risks. Without proper planning, retail investors could face significant challenges in realizing profits when market conditions become highly volatile.