Is an XRP Supply Shock on the Horizon? Expert Insights Unveiled

In recent conversations on social media platform X, a new narrative suggesting an "XRP supply shock" has gained traction. Several prominent accounts have shared a chart from Glassnode showcasing the dwindling exchange balances of XRP and speculated that exchange-traded funds (ETFs) are quickly depleting the liquid supply. However, an XRP Ledger dUNL validator has dismissed this notion, stating that the figures and the current market dynamics do not imply a genuine allocation squeeze.

Key Takeaways

A narrative of an impending "XRP supply shock" is circulating but challenged by experts.
An XRP Ledger validator argues that exchange balances are significantly higher than claimed.
The dynamics of market liquidity and changing exchange balances make the concept of "supply shock" complex.
Factors like ETF custody and escrow releases influence overall market liquidity.
The current market situation indicates sufficient XRP supply is available for buyers.

Ripple XRP news

One of the widely circulated posts came from @unknowDLT, who asserted on December 27 that XRP ETFs are rapidly absorbing supply. They claimed that with only about 1.5 billion XRP remaining on exchanges and approximately 750 million XRP being absorbed in recent weeks, a supply shock could be imminent by early 2026. The account connected this theory to the anticipated “Clarity Act,” suggesting it would prompt "price discovery" and characterize 2026 as a pivotal moment when XRP transitions from speculation to a global liquidity infrastructure.

Evaluating the Claims: Is an XRP Supply Shock Possible?

On December 28, Vet (@Vet_X0), an XRP Ledger dUNL validator, offered a rebuttal, presenting a screenshot indicating that exchange balances were closer to 16 billion XRP rather than just 1.5 billion. He suggested that assertions about a supply shock misinterpret a fluid market.

"There is no XRP supply shock on exchanges," declared Vet. "1) There are nearly 16 billion XRP available on exchanges which means there is plenty for anyone looking to buy. 2) Whether the price rises or falls, anyone without XRP on exchanges can quickly transfer theirs to anyone who wants to buy."

His argument emphasized that exchange balances and order-book liquidity are not constant; they can fluctuate rapidly based on price movements and market incentives. Consequently, he suggested that indicating a "supply shock" from declining balances is misleading.

"Also, XRP listed for sale on order books is dynamic," Vet elaborated. "It can quickly thicken or thin based on market activity. Sometimes $10 million in buying can drive prices up, while at other times, it takes $100 million in buying to stop prices from falling. The market is too dynamic for static interpretations."

The debate then shifted to the accuracy of wallet labeling and the underlying figures. Well-known analyst Zach Rector (@ZachRector7) raised questions about the accuracy of certain entries, for instance, asking, "Does Evernorth really hold only 86 million XRP?" In response, Vet advised treating the published figures as conservative estimates rather than exhaustive data.

"I have full confidence that these numbers represent the lower limit of what is actually on exchanges," said Vet. "This means the figures could be even higher, with more exchange accounts that remain undisclosed. If we consider Upbit alone, it holds 2 billion XRP across just a handful of its accounts."

Others countered that even large balances could mean tighter floating supply due to the custody structure, the cadence of escrow releases, and institutional accumulation. Dman Trader (@dmantrader) highlighted how monthly escrow mechanics work and claimed that ETF holdings are confined to specific XRPL wallets, mentioning they already "locked up 1% of the total supply within just a few months." He also noted that centralized exchange (CEX) and over-the-counter (OTC) inventories set aside for clients are difficult to quantify.

Vet acknowledged the logistical aspects involved, stating, "Ripple has indicated in the XRP report that they facilitate supply transfers for ETFs." However, he maintained that a true supply shock would necessitate an immediate imbalance in allocation—something he did not see as currently occurring.

"A supply shock suggests an allocation imbalance in the market, which is not the case," Vet asserted. "Of course, if someone were to suddenly demand 30 billion XRP tomorrow, then we might experience a supply shock. But, given the near 16 billion XRP available, alongside additional billions in Ripple's accounts, there's more than enough for everyone who wants to buy XRP."

Currently, the discussion presents a divide between narratives framed by influencers showing scarcity versus the infrastructure-based argument asserting that XRP liquidity is flexible, promptly accessible, and unlikely to experience a shock unless there’s a significant, urgent demand.

As of the latest reports, XRP is trading at $1.8982.

XRP price XRP remains below the critical threshold, as seen in the 1-week chart | Source: XRPUSDT on TradingView.com