XRP spot exchange-traded funds (ETFs) recorded a net outflow last week, ending three consecutive weeks of inflows and signaling a cooling institutional appetite for the asset.

At the same time, liquidity conditions on Binance have weakened. The exchange’s 30-day XRP liquidity index dropped to its lowest level in five years. 

Institutional Demand for XRP Cools After April Surge

According to data from SoSoValue, roughly $35,210 exited XRP ETFs in the week ending May 1. This marked the end of a stretch of consistent buying. 

XRP ETFs pulled in $82.88 million across the prior three weeks. The week of April 17 alone delivered $55.39 million in net inflows. This was the strongest inflow since mid-January.

Cumulative net inflows sit at $1.29 billion. Nonetheless, weekly net assets slipped to $1.06 billion.

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XRP Liquidity Index Hits 2020 Low on Binance

Meanwhile, an analyst flagged that XRP’s liquidity index has fallen to 0.038, the weakest reading recorded since 2020. According to the post, the drop points to a “clear weakness in market depth.”

In conditions like these, even moderate capital inflows can swing the price sharply in either direction. However, the analyst added that price action has remained relatively stable.

This is typically seen as a transition period in which prices have yet to fully reflect weakening liquidity, or as a phase of consolidation ahead of a larger move.

“On the other hand, the decline in the liquidity index may indicate a gradual exit by large investors or a reduction in institutional trading activity, further increasing market fragility,” Arab Chain noted.

The current setup leaves XRP exposed in both directions. A modest inflow could trigger a sharp rally in a thin market. At the same time, continued weakness in demand may increase the risk of a downside move.

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