Ripple’s native token, XRP, could soon experience a major supply shock as institutional interest rises sharply. According to crypto expert and YouTuber Ripple Van Winkle, the market may be unprepared for what lies ahead if spot XRP exchange-traded funds (ETFs) gain approval.
Although XRP was designed with a maximum of 100 billion tokens, most are unavailable for buying or selling. A significant part of XRP is set aside in escrow, limiting the total amount of tokens available.
Van Winkle pointed out that Ripple and a few big holders likely control over half the supply, meaning few XRP are available for exchange trading.
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With more traditional investors showing interest in ETFs, the supply becoming too tight may soon become a concern. Because of this, the XRP available to buy on exchanges could disappear swiftly, causing the market to face pressure.
Van Winkle believes that ETFs allow hedge funds, pension funds, and asset managers to more easily access the market. These funds do not own the assets themselves, making them safer and easier to manage. High inflows of capital using these channels can leave fewer XRP available for retail investors to purchase.
ETF Launches Could Trigger Sudden Liquidity Crunch
Van Winkle also pointed to the success of Teucrium’s leveraged XRP ETF, which recently became the company’s best-performing launch. This has strengthened the belief that investor interest in XRP-based funds is growing rapidly.
In addition, over ten spot XRP ETFs are currently awaiting approval from the U.S. Securities and Exchange Commission, which could trigger further demand.
Besides the ETF’s progress, people are paying close attention to the current state of cryptocurrency laws. Once its SEC case is resolved, Ripple might help open the way for more regulated investments. This positive development might add to XRP’s credibility with institutions.
Van Winkle pointed out that it is essential to position a company early before the rush for products overwhelms the industry. He pointed out examples from other sectors where collecting shares before the ETF was released caused significant price changes. The pattern that played out earlier for ETH and BTC looks familiar on XRP now.
As demand for ETFs increases and few XRP are released into the market, things could become critical. Fast action by institutional investors after ETF approval could cause XRP to move into unknown territory.
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