Conversations around XRP have grown louder in recent weeks as the cryptocurrency continues to trade around the $2.2 region, while new Spot XRP ETFs continue to pick up inflow from multiple issuers.
One voice in the community has tried to explain why the market is unusually calm despite rising institutional demand. An XRP enthusiast known as Pumpius shared a detailed thread on The impact may still be ahead. His argument is that the current XRP price action does not yet reflect what is happening behind the scenes.
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Why ETF rules create special market dynamics
Pumpius explained that the foundation of the entire setup is done in one legal detail with fund managers. ETF fund managers are not allowed to buy XRP directly from Ripple or from the escrow accounts that hold large reserves of the token. Any ETF must source XRP through open market purchases, without private deals or wholesale arrangements.
The lack of direct acquisition forces institutional buyers into the same liquidity pool as retail and whales. With the new launch of
According to market watchers, XRP supply on the major exchanges has steadily declined since the approval of the first Spot XRP ETFs, demonstrating that the pressure on available liquidity is not theoretical but active. Notably, data from CryptoQuant shows that Binance’s XRP reserves are now at its lowest point in months, this week it dropped to 2.7 billion tokens.
Incoming supply squeeze for XRP
Another part of the explanation focuses on Ripple’s conduct regarding the release of bail bonds. Although a billion XRP is unlocked every month, Ripple has repeatedly returned approximately 700 million to 800 million of these unlocked tokens to escrow.
Ripple only releases what it deems necessary to maintain healthy liquidity in the ecosystem, and the company has avoided significant selling pressure since adopting the ETF.
According to Pumpius, this means the ecosystem operates in a controlled equilibrium, with ETF issuers absorbing a growing share of the circulating float while Ripple keeps the escrow output extremely conservative.
The result is a slow tightening of supply that happens behind the scenes and may not yet be visible in the price action, but could eventually lead to what he calls a structural supply shock. When this happens, XRP will not move slowly, but will break the price levels with impact.
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Still talking about what is happens behind the scenesRipple has been a number of developments ahead that could strengthen XRP’s long-term position. In a recent example, Abu Dhabi’s financial regulator formally recognizes RLUSD as a fiat-referenced token.
Featured image from Unsplash, chart from TradingView