Analyst Investigates Potential XRP Liquidity Squeeze Amid Supply Concerns

Prominent analyst Cheeky Crypto explores the possibility of an XRP supply shock. He suggests that while XRP's ledger won't erase coins, the effective circulating supply may be much smaller than reported figures indicate. This could lead to a liquidity squeeze if demand spikes.

XRP Supply Analysis

CoinMarketCap reports 59.6 billion XRP as circulating, while XRPScan shows about 64.7 billion.
The discrepancy arises from different interpretations of "circulating," with some balances counted but not available for trade.
Ripple holds about 35.3 billion XRP in escrow, releasing up to 1 billion per month, making these coins unavailable for immediate trading.
Large holders like banks and fintechs may not actively trade their XRP, reducing the effective float significantly.
Estimates suggest the truly liquid supply might range between 20 to 30 billion XRP.

Potential Supply Shock Scenario

If demand accelerates faster than new supply, prices could rise sharply due to limited availability.
XRP Ledger's role in tokenization (debt, stablecoins, CBDCs) could increase demand for XRP as a settlement layer.
This scenario is likened to concert tickets or Bitcoin's halving, where sudden demand outpaces available supply.

The narrative around XRP's supply has shifted from excess to potential scarcity amid rising demand scenarios. The analyst highlights uncertainty and risk, noting that while tokenization on XRPL could drive a supply shock, it might develop slowly or on other platforms. At the time of reporting, XRP trades at $3.0198.

XRP price