Pundit Shares 6 Practical Ways XRP Could Witness a Supply Shock

Following the launch of spot XRP ETFs, conversations around whether XRP could face a supply shock have gained momentum.

This renewed interest has intensified on the back of a drop in exchange reserves on platforms like Binance. Amid the discussions, XRP community pundit Pumpius recently presented six practical situations that could trigger such a supply shock.

In a post on X, Pumpius noted that people often predict a dramatic supply shock that could push XRP much higher, yet only a few of them understand what actually causes one. 

According to him, a true supply squeeze happens only when XRP leaves the open market faster than new supply enters it. He claimed that nothing secret or sudden creates this scenario. Instead, it builds slowly as different forms of demand absorb available tokens. Pumpius then presented six ways such demand could occur.

ETFs, Institutions, and Corporate Treasuries

Specifically, he started with the first factor: spot ETF issuers must buy real XRP. Because these products rely on actual tokens rather than futures or synthetic exposure, issuers need to source XRP directly from exchanges. 

Notably, this steady buying reduces the amount of liquid supply left on trading platforms, as inflows persist. The Crypto Basic recently confirmed that XRP became the second-fastest to cross $800 million in ETF inflows. Today, these inflows have surged further to $874 million at press time.

Pumpius then highlighted the second factor, which involves banks and major asset managers. These institutions would need to hold XRP for settlement processes, treasury needs, and long-term liquidity planning, avoiding any frequent trades. Once they move XRP into custody, the asset leaves the circulating supply and no longer sits in the open market.

The third factor concerns corporate treasuries that could use the XRP Ledger for cross-border payments. According to Pumpius, when more of these companies adopt XRP-powered settlement corridors, they keep tokens in working capital accounts to support ongoing transactions. If they do not send this XRP back to exchanges, it remains locked away, contributing to the supply shock.

Ripple Escrow, On-chain Activity and ZK ID Infra

He then moved on to the fourth factor, which centers on Ripple’s escrow management. Pumpius explained that Ripple has no reason to release more supply than necessary, so the company could avoid releasing tokens from escrow. 

The fifth factor involves growing on-chain activity. In this case, more tokenized funds, RLUSD stablecoin operations, liquidity pools, identity layers, and payment corridors could expand on the XRP Ledger. Each of these use cases needs XRP to function, and that demand could remove additional tokens from active trading.

Finally, Pumpius highlighted the sixth factor: the introduction of zero-knowledge identity systems on the network. This new infrastructure could tie more XRP to identity-linked transactions and verification processes, which further reduces the amount of tradable supply.

When all these forces play out together, Pumpius noted that exchanges may begin to run low on inventory, OTC desks could tighten, and market liquidity would thin out. 

In such a scenario, buyers would then compete for a shrinking pool of available XRP, which naturally pushes prices higher. He added that real supply shocks do not build slowly in public view. Instead, they appear suddenly on the charts once pressure reaches a breaking point.