XRP there is one supply mechanism one of the most controversial topics on the cryptocurrency market. XRP exchange reserves have been degenerating for months and the on-chain numbers are outrageous. Now, a cryptocurrency expert on X is linking this structural change to a chain of events that could send the XRP price into territory the market has never seen.

The XRP supply shock could push stock exchanges into a liquidity crisis

A cryptocurrency expert known as DelCrxpto he added an engaging take on a scenario where demand for XRP exceeds available supply on the exchange and forces a up-to-date liquidity structure around Ripple’s XRP reserves. Whenever demand increases faster than available supply, the price must adjust. XRP may eventually reach a point where exchanges will struggle to obtain enough spot supply to meet demand from buyers, institutions and liquidity providers.

The expert predicted that the stock markets would eventually there will be no XRP, demand will explode and the entire XRP supply ecosystem may even be at risk of freezing. However, he believes that such a tightening would not only affect the price, but also force the market to do so create up-to-date liquidity channels from derivative contracts.

Interestingly, the expert also predicted that Ripple will step in through implementation part of its XRP reserve as a liquidity pool and issuing XRP derivative contracts to exchanges. These exchanges would then sell the contracts at the market price, allowing Ripple to monetize this structure.

What’s going on with delivery?

The current supply of XRP in circulation shows why the idea of ​​a complete depletion of XRP on exchanges should be treated with caution. At the time of writing, CoinMarketCap estimates the circulating supply of XRP at approximately 61.82 billion XRP. However, the most vital question is not how much XRP is in circulation, but how much of this supply is actually liquid and available for immediate sale on exchanges.

Recent on-chain data has begun to strengthen the argument that the XRP liquid supply may be decreasing. For example, the amount of XRP reportedly stored on Binance fell from approx 3.05 billion tokens to below 2.75 billion in less than a year, putting the exchange’s XRP reserves near multi-year lows.

The decline in the XRP wallet balance also coincided with an enhance in the number of XRP holders. Wallet addresses with at least 10,000 XRP reached a up-to-date all-time record wallets, showing that larger holders continue to build positions despite volatile XRP price movements.

Another vital signal comes from whale replacement activity. The data showed that the largest holders of XRP slowed the pace of sending tokens to cryptocurrency exchanges. 30-day cumulative whale arrival rate fell below 736 million XRP, lowest level since November 2021

Featured image created with Dall.E, chart from Tradingview.com