XRP supply shock theories circulating in cryptocurrency communities face mounting skepticism from industry experts who argue Bitcoin's market dominance remains the primary price driver. The debate intensified this week as conflicting data emerged about exchange balances and institutional absorption through newly launched ETFs.
Ripple advocate and lawyer Bill Morgan dismissed supply shock narratives as having "no significant explanatory value" for understanding XRP price movements. In social media posts on December 29 responding to Vet's exchange balance analysis, Morgan emphasized that Bitcoin's price action represents the predominant factor influencing XRP, echoing his previous criticism of Ripple escrow dump theories.
The controversy centers on exchange balance data showing centralized platforms holding approximately 1.5 billion XRP, down from around 4 billion at the start of 2025 according to Glassnode metrics. This 62.5% decline has fueled speculation about dwindling available supply, particularly after XRP ETFs launched in November 2025 accumulated over $1.25 billion in net assets.
XRPL dUNL validator Vet challenged these scarcity claims, asserting that exchanges collectively hold closer to 16 billion XRP. Blockchain explorer XRPScan data supports this position, showing major platforms maintaining substantial reserves. Upbit controls 12 wallets containing 6.256 billion XRP, while Binance and Binance.US manage 13 wallets holding 2.5 billion tokens.
Vet highlighted XRP's liquidity dynamics, noting tokens can transfer to exchanges within three to four seconds. This elasticity means order book depth fluctuates rapidly, with $10 million purchases sometimes lifting prices while $100 million buys occasionally fail to prevent declines during negative market sentiment.
Institutional demand through ETFs has removed approximately 750 million XRP from immediate trading circulation since November. The funds demonstrated notable traction on December 4, attracting $12.84 million in net inflows while Bitcoin and Ethereum ETFs recorded outflows according to Crypto News Flash data.
Despite supply narratives gaining social media traction, analyst price projections for 2026 emphasize broader market factors. JPMorgan analysts led by Nikolaos Panigirtzoglou applied volatility-adjusted valuation models estimating Bitcoin's fair value near $170,000, though they characterize this as an upper bound rather than firm target.
Technical analysts project Bitcoin reaching $133,000 by March 2026 based on historical cycle symmetry, with the cryptocurrency currently trading at $89,581. Ethereum targets cluster between $3,600-$4,800 for 2026 recovery, maintaining support above the critical $2,890 demand zone at $3,015.
XRP price predictions incorporate both supply dynamics and technical patterns, with some analysts forecasting $15+ extensions based on breakout fractals mirroring 2017 structures. The token trades around $1.89, showing modest 0.8% daily gains while volume surged 60.3% to $1.7 billion.
Market structure analysis reveals XRP constrained by a descending trendline since peaking near $3.49 in mid-2025, with RSI hovering near 37 indicating bearish momentum hasn't fully dissipated. A decisive breakout above resistance would shift sentiment toward the $3.49 prior high as an initial 2026 target.
The supply debate reflects broader cryptocurrency market patterns where narratives influence sentiment but Bitcoin's direction drives major price movements. As ETF institutionalization progresses, investors monitor whether sustained demand can alter XRP's historical correlation with Bitcoin's macro trends.
Current exchange data suggests ample liquidity exists despite ETF absorption, with four major platforms alone holding 10.435 billion XRP in wallets containing at least 1 million tokens each. This reservoir, combined with rapid transfer capabilities, challenges imminent supply shock scenarios while acknowledging long-term structural shifts from institutional participation.
