Growing questions about the true circulating supply of XRP are sparking new debate among analysts as spot XRP ETFs continue to buy XRP.
Two prominent figures in the XRP community, Zack Rector and Chad Steingraber, recently pointed out that there are very few places to acquire XRP in ETFs. And those sources do not include Ripple’s large escrow reserves.
Actual XRP float may be much lower than reported
Rector sparked controversy by questioning the true “float” of XRP, i.e. tokens that are freely available for trading. He claims that the effective supply of XRP is far below 10 billion XRP, which is far less than the approximately 60 billion XRP that market circulation tracking shows.
He noted that ETFs alone already hold more than 300 million XRP, suggesting the pool of available XRP may be much thinner than most assume.
In response, community members offered varying opinions on how to calculate float. One contributor speculates:
- Retailers may hold around 3 billion XRP in total
- Tier-1 exchanges including Coinbase, Binance, Kraken, Uphold, Bitrue could hold 5-10 billion XRP
- OTC and dark pool supply remains largely uncertain
Although estimates vary, most agree that the actual amount of liquid supplied is far from the published figure. Discussion has now turned to where ETFs can obtain XRP if over-the-counter liquidity dries up.
Ripple’s escrow is off-limits. ETFs cannot source XRP from there.
Meanwhile, Chad Steingraber claimed that current U.S. rules prevent XRP ETFs from purchasing XRP from Ripple escrow. This restriction stems from a 2023 court decision in the Ripple v. SEC case.
Notably, the court stated that Ripple’s institutional sale of XRP under the contract constituted an offering of unregistered securities. However, a programmatic sale on a public exchange is not an offering of securities.
Ripple has since received an exemption allowing it to raise funds from accredited investors, but this does not restore its ability to sell XRP directly to institutional investors.
As a result, institutional investors and ETF issuers will need to source XRP from the public market rather than Ripple. Currently, Ripple holds 34,700,000,005 XRP in escrow and an additional 4,954,117,520 XRP in available corporate balances.
So where can ETFs actually get XRP?
According to analysts, there are only a few realistic sourcing options for ETFs.
- Tier-1 exchanges (Coinbase, Binance, Kraken, Bitrue, Uphold, etc.)
- Remaining OTC and Dark Pool Liquidity
- Secondary market sellers such as retail stores and institutions
This limited procurement target is why analysts believe that XRP could face a supply shortage. With ETFs already holding approximately 300 million XRP and more issuers preparing to enter, demand is accelerating while accessible liquidity continues to decline.
Impending supply shock and “abnormal” price behavior
In a separate commentary, Jake Claver said the XRP ETF is “devouring” over-the-counter reserves and dark pool reserves faster than expected. Claver estimates that only 1-2 billion XRP was available privately before the ETF was launched.
Given the pace of ETF accumulation, Claver believes a supply shock is not only possible but inevitable. Specifically, he predicts that XRP could experience “crazy” price swings as a result.
The XRP community is currently waiting to see how quickly this potential supply shortage materializes and whether it will impact the price as widely expected.
