XRP Short Squeeze: Analyst Reveals Available Trading Supply Could Fall To Bitcoin’s 21 Million

[Redator]

Ripple’s XRP might be trending towards a short squeeze as new analysis suggested its available trading supply could shrink to levels comparable to Bitcoin’s 21 million cap. XRP commentator Chad Steingraber, in a post on social media platform X, argued that the amount of the altcoin actually available for retail trading is going to be a fraction of its total supply. 

His comments came in response to discussions about the role of institutional and network-led lockups, with projects such as Axelar and Flare Networks working to secure billions of XRP tokens.

XRP Might Be Gearing Up For Short Squeeze

The discussion began after a popular crypto commentator posted about Axelar’s plan to lock up $10 billion worth of XRP, a move that would remove around 5% of the token available to retail traders. Similarly, Flare Networks has set a goal of locking up 5 billion XRP. These two initiatives alone would place significant pressure on the pool of XRP available for active trading.

Steingraber noted that XRP’s active trading supply is what ultimately influences market pricing, not the total supply figure often cited. As such, he suggested that such accumulation by these companies, combined with other supply constraints, could reduce the number of the token available for public trading. 

Particularly, Steingraber predicted that this number could fall drastically to as low as 21 million XRP, an amount symbolically identical to Bitcoin’s hard cap.

The possibility of only 21 million XRP being available for trading from its current circulating supply of 59 billion tokens is very ambitious. However, the scenario of this drastic fall becomes possible if Spot XRP ETFs are approved in the United States. 

Institutional ETFs would demand a steady supply of XRP for custody, and this would create large-scale accumulation that could permanently restrict availability on exchanges. In such a case, supply shocks could become very common.

Aside from new institutional lockups, there are other clear signs that XRP’s active trading pool is thinning. A notable example is crypto exchange Coinbase, where XRP reserves have dropped sharply in recent months. 

Adding to that, Ripple itself still controls a large portion of the total supply, with billions of the token locked in escrow. Although these tokens are technically part of circulation, they are unavailable for retail use and are released only under strict schedules.

Price Impact Of A 21 Million Effective Supply

The idea that XRP’s active trading supply could fall to just 21 million tokens shows how scarcity could alter its valuation. Based on today’s circulating supply of about 59 billion XRP and a market price of $2.89, XRP has a market capitalization of about $172.8 billion. If that same market capitalization were concentrated into only 21 million tokens, the implied price per coin would be about $8,120. 

The most important thing now, however, is for the altcoin bulls to prevent any further declines below $2.8.