XRP ETF "Supply Shock" Questioned: On-chain data shows CEX still holds about 16 billion XRP

There has been ongoing discussion in the crypto community about whether the XRP spot ETF is triggering a “supply shock,” and this topic has been heating up recently. Some traders believe that the ETF custody structure is rapidly absorbing market liquidity, potentially causing a sharp decline in tradable XRP supply. However, the latest on-chain data and validator perspectives strongly counter this claim.

The controversy originated from a post on social platform X on December 27. The account unknowDLT claimed that the XRP ETF had absorbed a large amount of supply, leaving only about 1.5 billion XRP on exchanges, with roughly half of that recently digested, and further speculated that an XRP supply shock could occur in early 2026. However, this assessment was quickly refuted by XRP Ledger validator Vet.

On December 28, Vet pointed out that, based on on-chain data from multiple centralized exchanges (CEX), the current XRP holdings on exchanges are closer to 16 billion, not 1.5 billion. This scale indicates that the market still has sufficient immediate liquidity and is not yet experiencing a true supply tightening. He emphasized that XRP transfer speeds are extremely fast, typically 3 to 4 seconds to move from a personal wallet to an exchange, so supply is dynamic rather than statically locked.

Vet also stated that a “supply shock” requires a significant imbalance of supply and demand within a short period, not a long-term, gradual institutional buying process. Even if ETF accumulation continues, as long as exchanges and Ripple operational accounts hold tens of billions of XRP, the market is unlikely to face extreme liquidity depletion.

During the discussion, some also questioned the accuracy of exchange wallet identification. Crypto commentator Zach Rector raised doubts about certain data assumptions. In response, Vet said that the currently disclosed data are conservative estimates; for example, four known wallets of leading Korean CEXs hold about 2 billion XRP, which is only part of the exchange’s total holdings.

Another segment of market participants believes that custody mechanisms, ETF capital release pace, and institutional buying methods could exert short-term pressure on circulating supply. However, Vet maintains that the ETF holdings currently account for only about 1% of the new supply added in recent months, insufficient to trigger an XRP supply shock on its own.

Overall, the disagreements over XRP ETF, exchange balances, and on-chain liquidity reflect different understandings of the price discovery mechanism. In the context of rising expectations for a spot XRP ETF, whether XRP supply is truly tightening still requires ongoing observation of CEX balance changes, custody release pace, and genuine buying strength, rather than drawing conclusions based on a single indicator.