XRP available on major exchanges has fallen dramatically in recent months. Coinbase, a key custodian, holds only around 100 million XRP, down nearly 90% from previous levels. This sharp drop sets the stage for a supply squeeze, as institutions preparing for spot ETFs accumulate tokens.
Institutional Moves Creating Market Ripples
Large firms filing for XRP spot ETFs have started buying strategically through TWAP and VWAP. Each purchase reduces circulating supply since ETF shares are backed by actual XRP held in custody with providers like Coinbase or Anchorage. With some ETFs representing between 5 and 50 XRP per share, these inflows are expected to have a noticeable effect on the market.
Regulatory Changes Fuel Confidence
Paul Atkins, the new SEC chair, is viewed as crypto-friendly. Under his leadership, the SEC is providing clearer guidance instead of enforcing strict regulations. Combined with the CFTC’s support, this could speed up ETF approvals compared to the past. The SEC currently requires six months of futures market trading before approving a spot ETF, but future rules may allow faster approvals based on market volume and total asset capitalization.
Historic Precedent: Bitcoin and Ethereum
Past ETF launches for Bitcoin and Ethereum provide insight. In both cases, institutional demand through ETFs drove price movements and reduced available supply. XRP could see similar dynamics, especially with a tight exchange inventory.
Market Watch: A “Supply Shock” in Motion
The combination of shrinking XRP inventory and institutional accumulation is creating a de facto supply shock. Jake Claver said that each approved ETF could lock more XRP in custody, reducing circulation and amplifying market pressure. Experts are closely tracking filings and custody flows as indicators of potential market shifts.
