XRP Supply Shock Theory Is Baseless, Data Shows

As the XRP supply shock narrative continues to gain traction, prominent commentators argue that on-chain data does not support the claim. 

In recent times, several reports have highlighted a decline in the amount of XRP held on exchanges. Supporters of the supply shock thesis, including Zach Rector, have amplified this trend, pointing in particular to Binance’s falling XRP balance as evidence.

They argue that as exchange reserves shrink, XRP’s liquidity on major trading platforms could dry up, potentially leading to a sharp price surge.

Exchanges Still Hold Over 15B XRP

Meanwhile, as speculation intensified, a community member shared data from a platform that tracks XRP exchange balances. The latest update shows that 15,401,504,547 XRP (15.4 billion) are still held across 26 exchanges.

According to the data, South Korean exchange Upbit holds the largest share, with 6.25 billion XRP spread across 13 wallets. Binance follows with 2.52 billion XRP across 21 wallets, while Bithumb ranks third with 1.82 billion XRP held in nine wallets. Overall, other exchanges in the ranking collectively hold hundreds of millions to billions of XRP.

Expert Criticizes Supply Shock Theory

Reacting to the data, legal expert Bill Morgan mocked the supply shock narrative, arguing that current figures do not support it. His commentary highlights several supply realities that undermine claims of an impending supply crunch.

Specifically, Morgan noted that the 15.4 billion XRP held on 26 exchanges represents only 15% of the token’s total supply of 100 billion. He also pointed out that this figure accounts for roughly 25% of the circulating supply of 60.67 billion XRP.

His argument suggests that in a genuine supply shock scenario, liquid tokens available for trading on exchanges would need to become scarce. Instead, more than 15 billion XRP remain readily accessible, providing deep liquidity for both buyers and sellers.

ETFs Hold Less Than 1% of Supply

Meanwhile, Morgan also addressed the role of XRP ETFs, which some investors believe could trigger a supply shock as they acquire more tokens.

According to his assessment, XRP held in spot ETFs accounts for just under 1% of the total supply. This is far too small to meaningfully restrict circulation or create sustained scarcity.

For context, SoSoValue data shows that spot XRP ETFs have a net asset value of $1.27 billion, representing just 679.14 million tokens, or 0.67% of the total supply. Unlike Bitcoin, where ETFs have absorbed a meaningful share of BTC’s supply, XRP ETFs currently have a negligible impact on overall availability.

Notably, Morgan underscored his stance by openly laughing at the “supply shock” theory, effectively mocking the idea that it could trigger a meaningful price spike. Earlier this week, prominent XRPL dUNL validator Vet echoed a similar view, dismissing the supply shock narrative as ineffective.

He emphasized that exchanges still hold enormous XRP reserves and added that traders can quickly replenish exchange balances by sending tokens to trading platforms within seconds whenever prices fluctuate.