Will XRP supply possibly "disappear" overnight? Experts reveal potential liquidity shock for XRP, which may lead to a big pump in price.

Renowned crypto analyst Cheeky Crypto (with 203,000 subscribers on YouTube) validated a widely circulated claim: the circulating supply of XRP could potentially "disappear overnight." His conclusion does not imply a literal disappearance of the Token, but rather points out that the actual circulating supply of XRP may be far lower than the numbers generally accepted in the market. Once demand surges, this scarcity could trigger a sharp liquidity shock, leading to a violent price pump.

A Re-examination of the Argument of "Oversupply"

Cheeky Crypto first acknowledged his skepticism regarding the argument of "XRP supply disappearing overnight" in the video, but then decided to rigorously verify it. He framed this analysis around reconciling two long-standing opposing viewpoints: that is, "the XRP supply is too large to achieve high prices," and the assertion made by some well-known figures in the community that "most of the so-called 'circulating' supply is actually not available for trading."

His first step was to conduct a simple data verification. He found that CoinMarketCap showed the circulating supply of XRP to be approximately 59.6 billion coins, while the report from XRPScan indicated a figure of 64.7 billion coins. This discrepancy led to the core methodology of his analysis: different data sources have varying definitions of "circulating supply."

He explained that on-chain data typically includes balances that are excluded or considered restricted by aggregators, among which the most prominent is Ripple's programmatic escrow. He emphasized that Ripple still holds approximately 35.3 billion XRP, which are locked in multiple wallets and released monthly (up to 1 billion per month). Although these tokens exist on-chain and can be tracked, "they are not really lying in the exchanges" and cannot be accessed immediately by buyers. Therefore, for all intents and purposes, "this portion of the escrow reserve is effectively out of the market."

Effective circulation: far less than the market's common perception

After stripping away the custodial part, Cheeky Crypto's analysis shifted from the vague concept of "circulating supply" to the more refined "effective float." He believes that, aside from the custodial portion, many large strategic holders—such as banks, fintech companies, or other whales—may also hold substantial balances but do not list them for sale on the order book.

He pointed out that if the custody and the reserves of these non-sellers were excluded, the effective circulating supply of XRP "is actually far less than the figures of 59 billion or even 64 billion." He cited the community's estimated range of "20 billion or 30 billion" as the amount of Tokens that may truly have Liquidity at any given moment, while emphasizing that no one can provide an exact number.

It is this framework of "effective circulation volume" that forms the basis of his core argument—potential supply shocks. He believes that "price is a game of supply and demand"; if institutional or sovereign-level users suddenly need a large amount of XRP, and "the market finds that there is not enough XRP available for immediate acquisition," the order book may quickly thin out, and the price may subsequently "skyrocket, sometimes even experiencing violent fluctuations."

Two Major Catalysts: The Tokenization Wave and "De Facto Halving"

(Source: TradingView)

Cheeky Crypto anchors this hypothetical demand on asset tokenization. He points out that we are in the early stages of a huge transformation in the financial sector - on-chain tokenization of debt, stablecoins, central bank digital currencies (CBDCs), and even gold, with the goal of the XRP Ledger being to become the "settlement layer" for these assets.

He cited comments made by Ripple's Chief Technology Officer David Schwartz regarding the early shift of XRPL towards tokenized assets, and pointed out that institutional research firm Bitwise has viewed XRP as a way to participate in the tokenization theme. He constructed a scenario: if "trillions of dollars in value" begin to settle through the XRPL network, then the demand for XRP reserves used for bridging, liquidity, and settlement will sharply increase, thereby tightening the effective circulating supply.

To illustrate this point vividly, he provided two analogies. First is the "concert ticket" model: you think there are 100,000 tickets (total supply of 100 billion), but 50,000 are held by the organizer (custodied), 30,000 are held by corporate buyers (whales), leaving only 20,000 available to the public; if a million people want to enter, the price will skyrocket. The second comparison is with Bitcoin halving: although XRP does not have a programmed halving, he believes that a sudden wave of adoption can have the effect of a de facto halving—"XRP's own halving might just be the event of adoption itself."

Conclusion

The conclusion of Cheeky Crypto is well thought out and clearly defined. Although the claim that "XRP supply vanished overnight" is not literally accurate, as tokens are not wiped from the ledger, he concludes through studying the data calculation methods of the dashboard, the custody mechanisms, and the behaviors of large holders, that the effective circulation of XRP may be much smaller than the surface numbers suggest. He believes that under the right conditions, rapidly developing tokenized use cases could put enormous pressure on this limited circulation. He acknowledges that the phrase "overnight" is somewhat dramatic, but states that "when this change truly arrives, it could indeed be very sudden." His analysis provides a new perspective on the long-standing argument of XRP's "oversupply" and offers investors a potential upward catalyst worth watching.