XRP Supply Shock Looms: Experts Weigh In on Ripple’s Next Move

Forget gradual climbs—the crypto market thrives on seismic shifts. Rumors of an imminent XRP supply shock have traders scrambling, but what's the real story behind the chatter?

The Mechanics of a Market Squeeze

Supply shocks aren't magic; they're arithmetic. When available tokens rapidly exit circulation—locked in escrow, staked, or snapped up by institutional vaults—basic economics takes over. Scarcity meets demand, and price charts tend to bend. Ripple's periodic escrow releases have long been a known variable, but the calculus changes if those releases slow, stop, or get dwarfed by unprecedented buying pressure.

Expert Voices Cut Through the Noise

Analysts point to two converging forces: regulatory clarity acting as a green light for institutional accumulation, and Ripple's own expanding use-case ecosystem pulling more XRP into active utility, not just speculative holding. The lingering question isn't if demand is growing, but whether it can outpace and absorb the available supply fast enough to trigger a true shockwave. Some see a perfect storm brewing; others warn of market cycles fueled more by hopeful narratives than on-chain reality—a classic case of 'buy the rumor, sell the news,' often before the news even arrives.

The Verdict: Potential, Not Promise

The ingredients for a supply shock exist, but crypto markets have a PhD in disappointing textbook outcomes. While the logic is sound, execution is everything. Watch the escrow wallets, track the exchange reserves, and ignore the hype. In a world where 'financial innovation' sometimes just means finding new ways to be early and wrong, the only real shock might be how quickly sentiment can flip.

Claims of an XRP supply shock have gained attention in recent weeks, driven by reports of falling exchange balances. Supporters believe lower token availability, combined with rising demand from XRP ETFs, could support a strong market move. However, several well-known voices in the XRP community are pushing back, saying exchange data alone does not reflect how XRP actually trades.

Bill Morgan Pushes Back on the Theory

Ripple advocate and lawyer Bill Morgan has firmly rejected the idea that a supply shock explains XRP’s price behavior. According to Morgan, changes in exchange balances offer little real insight into where XRP is headed next. He argues that Bitcoin’s price action remains the single most important driver, not just for XRP, but for most of the crypto market.

Morgan compares the current supply shock narrative to earlier theories around Ripple’s escrow releases, which he says were also wrongly blamed for price stagnation. In his view, XRP continues to follow Bitcoin’s lead, rising and falling with broader market sentiment rather than isolated supply metrics.

Data Sparks Questions, Not Certainty

Recent data from Glassnode shows centralized exchange holdings falling from around 4 billion XRP at the start of 2025 to roughly 1.5 billion this week. Roughly 750 million tokens were absorbed in recent months, coinciding with the launch of spot XRP ETFs that now hold about $1.25 billion in assets.

While some investors see this as evidence of long-term accumulation, others question whether the numbers tell the full story. Crypto commentator Zach Rector openly challenged the accuracy of some reported figures, saying certain exchange balances looked surprisingly low. He specifically questioned whether listings like Evernorth holding just 86 million XRP fully reflect actual liquidity across platforms.

Validators Say Liquidity Isn’t Drying Up

XRPL validator VET echoed this skepticism, arguing that there is no true XRP supply shock on exchanges. He estimates that roughly 16 billion XRP remains readily available across trading venues, far more than what selective datasets suggest.

More importantly, VET highlights how flexible XRP liquidity is. Tokens can be sent to exchanges in seconds, meaning order books can quickly expand or contract based on market conditions. As a result, price reactions often appear inconsistent, with small buy orders sometimes pushing prices higher while much larger purchases fail to stop declines.

XRP ETFs Add Fuel, But Bitcoin Still Leads

ETF inflows have clearly added a new LAYER to the XRP story, raising expectations of reduced selling pressure. Still, critics argue that ETF demand alone doesn’t override the dominant influence of Bitcoin.

For now, the debate reflects a familiar crypto pattern. Supply narratives can shape sentiment, but major price moves are still driven by macro trends and Bitcoin’s direction. Until that changes, XRP’s fate is likely to remain tied to the broader market rather than a true supply squeeze.