Key Points
- Binance’s XRP reserve has surged by 280 million coins
- Exchange positions recover after a $6.34 billion security vulnerability incident
- On-chain indicators show that the liquidity signals for XRP are contradictory to each other.
Binance’s XRP reserves increased by approximately 280 million in just 48 hours, reversing the earlier downward trend of this cryptocurrency exchange after a security vulnerability incident worth $634 million occurred on October 29th.
According to analyst Amr Taha from CryptoQuant, the number of XRP held by Binance has increased from 2.35 billion on November 3 to 2.63 billion on November 5, representing a growth of 11.9%.
Previously, 233.46 million XRP were stolen from 5 of Binance's hot wallets. The latest changes in reserves have thus raised questions: do these movements reflect reserve replenishments, customer activities, or internal transfers?
After the security incident, Binance's XRP reserves increased by 11.9%
CryptoQuant data shows that after this attack occurred, there was a clear reversal in the net flow of large-value transfers.
On October 29th, Binance recorded a large net outflow of approximately 226 million XRP. By November 4th, the same indicator had reversed to a net inflow of about 273 million XRP.
At the time of this reversal, Binance was still continuing to rebuild its balance sheet. Previously, hackers had stolen cryptocurrency assets across multiple blockchain networks.
In the security update on November 3rd, Binance confirmed that approximately $6.34 billion in digital assets were affected. The exchange stated that it has replenished 98% of the affected token assets and frozen or intercepted about $2.85 billion.
XRP is one of the assets for which Binance has restored its reserves to fully cover them.
The latest data also corroborates previous reports regarding Binance's replenishment of stolen cryptocurrencies and the subsequent restoration of withdrawals for XRP.
However, CryptoQuant has not independently confirmed the source of the additional 280 million XRP. Therefore, this increase should not be interpreted solely as an increase in customer deposits or the purchase of new alternative assets.
XRP Deposits are rising, but there is a divergence in liquidity signals among exchanges
Trading data indicates that Binance's market share in XRP deposit transactions has risen from 44.3% on October 27th to 56.2% on November 5th.
At the same time, its proportion of withdrawal transactions decreased from 55.7% to 43.7%.
These percentages refer to the number of transactions, not the quantity of XRP. Therefore, it is not possible to determine the net value of customers' deposits based on this information.
It is worth noting that another author, CryptoQuant, stated that Binance's XRP scarcity index has risen to around 2.1, the highest level since 2022.
This indicator measures the relative tradable supply, therefore it is not the same as the total reserves of the exchange. In other words, Binance as a whole may hold more of XRP, but the liquidity that can be immediately used for trading may still be relatively limited.
Against the backdrop of a net outflow of approximately $4.72 billion after the exchange reopened, this difference is particularly significant.
What does an increase in XRP reserves mean?
The latest increase in reserves does not automatically imply bearish selling pressure.
When customers deposit assets with the exchange, the exchange's balance may increase; however, the same change can also result from internal wallet transfers or replenishments for missing reserves.
Investigators are also focusing on the stolen XRP itself. Coinpaper previously recorded two transfers, totaling approximately 101 million US dollars, which indicates that even though the customer's balance has been restored, the stolen funds may still continue to circulate.
Another source of uncertainty comes from the difference between “reported reserve coverage” and “full financial recovery.”
As explained in Coinpaper's previous analysis regarding reserve certificates, asset verification does not necessarily provide evidence of a exchange's overall financial condition.
