Following the launch of the Spot XRP ETF, the debate over whether XRP could face a supply shock is gaining momentum.
This renewed interest is further intensified against the backdrop of declining foreign exchange reserves. Platforms like Binance. Amidst the debate, XRP community expert Pumpius recently presented six practical situations that could cause such a supply shock.
In a post about X, Pampius pointed out that people often predict a dramatic supply shock that could significantly boost XRP, but only a few understand its actual cause.
According to For him, a true supply squeeze will only occur if XRP exits the public market faster than new supply can enter it. He claimed that there is nothing secret or sudden that creates this scenario. Instead, it builds slowly as various forms of demand absorb available tokens. Poumpius then offered six ways in which such a demand could arise.
ETFs, institutional investors, and corporate treasuries
Specifically, he began: first element: Spot ETF issuers must buy real XRP. Since these products rely on real tokens rather than futures or synthetic exposure, issuers must source XRP directly from exchanges.
Notably, this steady purchase reduces the amount of liquid supply remaining on the trading platform as inflows continue. Basics of cryptography recently confirmed XRP became the second fastest ETF to surpass $800 million in inflows. Now, those inflows have skyrocketed even further, reaching $874 million at the time of writing.
Next, Mr. Poumpius emphasized the following points: second elementwhich involves banks and large asset managers. These institutions need to hold XRP for settlement processfinancial needs, long-term liquidity planning, avoid anything frequently transaction. When you move XRP into storage, the asset is removed from the circulating supply and no longer remains on the public market.
of third element concerns corporate finance It is possible to use the XRP Ledger for cross-border payments. According to Pumpius, when these companies adopt an XRP-powered payment corridor, they will store the tokens in working capital accounts to support ongoing transactions. If this XRP is not sent back to the exchange, it will remain trapped and contribute to a supply shock.
Ripple escrow, on-chain activity, ZK ID infrastructure
Then he moved on to the next thing. Fourth elementcentered around ripple escrow management. Poumpius explained that Ripple has no reason to release more supply than it needs, so it can avoid releasing tokens from escrow.
of 5th element Includes growth in on-chain activity. In this case, more tokenized funds, RLUSD Stablecoin Operations, liquidity pools, identity layers, and payment corridors may be extended on top of the XRP Ledger. Each of these use cases requires XRP to function, and their requests can result in additional tokens being removed from active transactions.
In conclusion, Mr. Poumpius emphasized that: 6th element: Deploying zero-knowledge identity systems on networks. This new infrastructure could potentially tie more XRP to ID-linked transactions and validation processes, which would further reduce the tradable supply.
With all of these forces in play, exchanges could begin to run out of inventory, straining OTC desks and reducing market liquidity, Pampius said.
In such a scenario, buyers will be competing for a shrinking amount of available inventory. XRPprices will inevitably rise. He added that real supply shocks do not slowly unfold in public. Instead, it suddenly appears on the chart when the pressure reaches a breaking point.
