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$XRP is one of the crypto assets with an extensive circulating supply, which continues to draw criticism from skeptics.
In response, $XRP proponents often advocate for measures that could reduce the available supply of $XRP tokens, hoping this could positively influence its price.
$XRP Supply
$XRP is currently trading at $3.01, with a circulating supply of 59.14 billion tokens, giving it a market cap of approximately $179.28 billion. Meanwhile, it has a total supply of 99.98 billion tokens, with a fully diluted valuation of $301.47 billion.
Reducing $XRP Supply
Meanwhile, the $XRP community has frequently speculated about potential initiatives that could reduce the available supply. These discussions were widespread when $XRP was significantly underperforming at around $0.50.
Now that the token is trading above $3, such calls have vastly diminished. However, the broader argument of a potential supply shock remains a topic of discussion.
One of the most widely discussed proposals is for Ripple to burn the 35.60 billion $XRP it currently holds in escrow (worth over $106 billion). Advocates of this strategy believe it could help drive $XRP’s price higher.
However, Ripple CTO David Schwartz has argued that burning the company’s escrowed tokens would be ineffective in increasing $XRP’s price. Moreover, Ripple’s competitor Stellar took a similar approach by burning half of its supply, but this had little significant impact on the price of XLM.
$XRP Price If Supply Drops to 40B
So, in a hypothetical scenario where Ripple and other major holders burn large portions of their $XRP holdings, reducing the circulating supply to just 40 billion tokens, what could the price be?
While there’s no definitive answer, if the market cap remains at $179 billion, the price of $XRP could theoretically rise to $4.48.
Can This Happen?
A price of $4.48 would represent a significant improvement over $XRP’s current value of $3. It would also mark a new all-time high for the coin.
However, this scenario is purely hypothetical. When tokens are burned, their valuations don’t remain static—market cap typically adjusts. $XRP’s price would only rise if the reduced supply is met with increased demand.
Secondly, the path to reducing $XRP’s circulating supply to 40 billion is improbable. The amount of $XRP burned through transactions is minimal and largely ineffective. Despite 13 years of burns, the total supply still stands at 99.98 billion.
Moreover, Ripple and other major $XRP holders are unlikely to burn their tokens. Doing so would mean sacrificing substantial financial assets for a gamble that may not work out. For context, removing 60 billion $XRP from the supply would mean wiping out $180 billion in value at today’s prices.