Discussions around XRP price are increasingly shifting from transaction volume to supply lockup, as decentralized finance (DeFi) platforms, exchange-traded funds (ETFs), and declining exchange reserves reduce the token’s circulating supply.
Several analysts now argue that long-term supply constraints may play a bigger role in XRP’s valuation than how frequently the asset is used for payments.
Over the years, activity on the XRP Ledger (XRPL) has been cited as a key driver of XRP’s value. Particularly, the network’s ability to settle transactions in roughly three seconds positioned XRP as a fast bridge asset for cross-border payments.
However, critics of the transaction-volume thesis note that network speed and utility alone do not guarantee sustained XRP price appreciation. Notably, because XRP settles transactions quickly, capital often moves through the network without remaining locked in the ecosystem for long periods.
DeFi Introduces Structural XRP Supply Reduction
A recent post by crypto commentator “All Things XRP” highlights a growing belief that XRP’s long-term price movement may depend less on transaction flow and more on how much XRP is removed from circulation entirely.
This perspective reflects broader changes across the crypto market, where decentralized finance, institutional custody, and financial products are reshaping supply dynamics.
According to the analyst, several DeFi initiatives are now prioritizing long-term XRP lockups rather than short-term transactional use.
One such project, mXRP, is reportedly targeting up to $10 billion worth of XRP locked within DeFi protocols. Assets committed to these platforms are typically unavailable for trading over extended periods.
Similarly, the Flare network has set a target of 5 billion XRP locked by mid-2026, using XRP within smart contract and liquidity frameworks. Unlike transaction activity that settles within seconds, these locked assets directly reduce the amount of XRP available on open markets.
Recall also that Flare, in partnership with Enosys Loans, launched the first XRP-backed stablecoin in 2025. Together, these developments represent structural supply removal, not usage-based demand.
Related: earnXRP Launches as XRPFi Pushes Brings Yield Opportunities to XRP Holders
Institutional Products Reduce Tradable XRP Supply
Institutional exposure to XRP is also contributing to tightening supply conditions. According to the update, XRP ETFs are holding more than 477 million XRP, placing a significant portion of tokens into long-term custody.
Generally, assets held through ETF structures are not traded frequently, limiting the available circulating supply. At the same time, on-chain data shows declining XRP balances on centralized exchanges, a trend often linked to reduced sell pressure.
For the uninitiated, lower exchange reserves typically suggest that more XRP is being moved into private wallets or institutional storage.
Read also: XRP Price “Already Determined” by Global Institutions, Says Black Swan Capitalist Founder
How Supply Lockup Could Impact XRP Price
Citing these developments, the analyst argues that shrinking tradable supply could have meaningful long-term implications for XRP price behaviour.
When circulating supply decreases while demand remains steady, market conditions tend to tighten. Unlike speculative demand spikes, supply lockups are structural and can persist even during broader market downturns.
While these trends do not guarantee immediate price appreciation, they may influence XRP’s long-term valuation if lockups continue to expand. The analyst also cautioned that many of these initiatives remain in early stages, and DeFi adoption across the market is still uneven.
Still, the narrative shift is notable. Rather than focusing solely on transaction speed and volume, market participants are increasingly tracking how much XRP is no longer available for trading.
If current trends persist, supply dynamics — not transaction activity — may play a more prominent role in shaping XRP price action in the months ahead. As earlier reported by Nitadel, experts have explained how DeFi could trigger an XRP supply shock, potentially pushing its price higher.
