Expert Predicts When XRP Might Disappear from Exchanges

An XRP community commentator has predicted a possible timeline for the XRP on exchanges to disappear, potentially leading to a supply shock.

The recent commentary comes on the back of the underwhelming performance observed by XRP over the past few months. Specifically, since dropping from the $3.3 peak in mid-January, XRP has struggled to find its footing, constantly ranging at the lower end of the $2 region.

Farina Predicts When XRP Supply Shock Could Materialize

This performance has expectedly triggered concerns among investors, especially with Bitcoin (BTC) already witnessing new all-time highs this month. Nonetheless, market pundits like Edoardo Farina, the Alpha Lions Academy founder, believe XRP still has the potential to engineer an impressive rally.

In his latest commentary, Farina pointed to one factor capable of triggering such a rally: a supply shock. According to Farina, there is a possibility that the number of XRP tokens present on exchanges could drop significantly to the extent of “disappearing.”

For context, such a development would lead to an environment where investors would struggle to purchase XRP with little tokens available for procurement. Market analysts call this scenario a supply shock, and Farina believes it could happen by 2030, five years from now.

XRP Exchange Reserve Declining

Interestingly, data from CryptoQuant indicates that the number of XRP tokens on exchanges, specifically Binance, has actually seen a drop in recent times. This year alone, Binance’s XRP reserve has reduced by 82 million tokens, dropping from 2.939 billion tokens to 2.857 billion tokens.

Notably, while this depreciation rate is rather low, it still confirms a trend of collapsing reserves on exchanges. Analyst EgyHash identified this pattern in an analysis last month. At the time, he confirmed that the XRP reserve on Binance had continued to fall, reaching levels last observed last July. Moreover, The Crypto Basic also spotlighted the trend back in March.

Data from the CryptoQuant chart shows that the Binance XRP reserve initially rose from 2.939 billion tokens on Jan. 1 to 3.040 billion tokens on Jan. 16, coinciding with XRP’s rise to the seven-year peak of $3.3 on that day. This increase was likely due to investors sending their tokens to Binance to take profit from the price uptrend.

However, after the 3.040 billion high, the reserve started collapsing amid XRP’s price retracement. It reached a low of 2.72 billion tokens on Feb. 28 before recovering above 2.9 by March 2. Since then, it has continued to fluctuate. Nonetheless, from Jan. 16 to now, the reserve has dropped by 183 million XRP.

A Lesson from Bitcoin

If the ongoing trend persists, exchange reserves could drastically collapse, aligning with Farina’s projection. Interestingly, this pattern of dried-up supply is one of the major determinants of Bitcoin’s push toward new ATHs, as companies and ETFs are now procuring more BTC than is produced daily.

This would likely be the effect of an XRP supply shock. Some analysts have also pointed to the constant XRP burn from transactions as another factor that could contribute to the supply shock. In a previous disclosure, Farina insisted we would see higher XRP prices this year, also citing the potential supply shock. 

Currently, XRP changes hands at $2.28, down nearly 5% over the past week. However, market tool Sistine Research previously projected a possible run to a range of $33 to $50 for the asset.