XRP ETF “supply Shock” Fears Face Pushback As On-chain Data Shows 16B On CEXs

XRP traders clash over whether spot ETFs and escrow rules are draining exchange liquidity, with validators citing 16B XRP on CEXs versus viral 1.5B shock claims.

A debate over XRP supply constraints has emerged among cryptocurrency market participants following circulation of exchange balance data and claims that exchange-traded funds are rapidly depleting available liquidity.

A Dec. 27 post on social media platform X from account unknowDLT stated that XRP ETFs are absorbing supply, with approximately 1.5 billion XRP (XRP) remaining on exchanges and roughly 750 million absorbed in recent weeks. The post projected a potential supply shock by early 2026, linking the forecast to proposed regulatory legislation referred to as the “Clarity Act.”

An XRP Ledger dUNL validator operating under the name Vet disputed the analysis on Dec. 28, providing data indicating exchange balances closer to 16 billion XRP rather than 1.5 billion. According to Vet’s response, the higher figure represents XRP readily available to market participants.

Vet stated that exchange balances and order-book liquidity fluctuate based on price movements and market incentives, arguing that supply shock scenarios require immediate allocation imbalances rather than gradual accumulation trends. The validator noted that XRP holders can transfer tokens to exchanges within three to four seconds, creating dynamic rather than static supply conditions.

“Markets are too dynamic to statically plot movements,” Vet wrote in the Dec. 28 post, adding that buying pressure of varying magnitudes can produce different price effects depending on market conditions.

Questions regarding wallet identification accuracy emerged during the discussion. Cryptocurrency commentator Zach Rector raised concerns about specific data points in the exchange balance calculations. Vet responded that the published figures should be considered conservative estimates, citing Upbit as holding approximately 2 billion XRP across four wallet addresses, representing only a portion of that exchange’s total holdings.

Market participant Dman Trader countered that effective circulating supply could tighten due to custody structures, escrow release schedules, and institutional accumulation patterns. The account referenced monthly escrow mechanics and claimed ETF holdings stored in dedicated XRP Ledger wallets represent approximately 1% of total supply accumulated over recent months.

Vet acknowledged that Ripple facilitates supply transfers for ETFs according to company reports, but maintained that genuine supply shocks require immediate allocation imbalances rather than steady institutional buying. The validator stated that with 16 billion XRP on exchanges and additional billions in Ripple operational accounts, sufficient liquidity exists for current market demand.

The exchange highlights differing interpretations of on-chain data and market structure within the XRP trading community following the launch of spot XRP ETFs in the United States. Exchange balance trends and their implications for price discovery remain subjects of ongoing analysis among market participants.