Billions Of XRP Set To Be Taken Out Of Circulation – Here’s How

A quiet yet powerful shift could be underway within the XRP ecosystem as billions of tokens are steadily moving away from open trading and into systems that keep them locked for longer stretches of time. According to crypto pundit Zach Rector, network upgrades and DeFi opportunities could encourage holders to commit their XRP for the long term, thereby reducing the number of tokens available for active trading.

Zach Rector Warns Of Looming XRP “Supply Shock”

Zach Rector, a well-followed crypto commentator, has raised the alarm about what lies ahead for XRP. According to Rector, billions of tokens are on track to be locked and deployed inside decentralized finance protocols in the near future. Rector argues that massive amounts of XRP are on track to leave circulation as they get stored inside long-term blockchain systems and institutional programs.

Rector points out that liquidity is no longer moving freely across open exchanges as it once did. Trading volume that once flowed across markets is now shifting into smart contracts, secure custody accounts, and platforms that offer steady returns. Such moves reduce the number of tokens left for open trading on exchanges.

As the pool of active tokens shrinks, upward pressure on prices is likely to intensify over time. Short-term traders who focus solely on daily movements may overlook the more profound changes now underway. The Rector’s view suggests that demand is no longer the sole factor shaping XRP. Supply is shrinking step by step, setting up the possibility of a crunch that could change the market’s direction soon.

Innovations To Drive Large-Scale Token Lockups

At the core of these changes is the XRP Ledger itself, which now includes an Ethereum Virtual Machine (EVM) sidechain, opening the door to smart contracts, lending markets, and liquidity pools. These new capabilities allow holders to utilize their XRP directly on the network, making long-term token commitments more attractive.

Cross-chain bridges, such as Axelar, allow XRP to move easily between networks, facilitating the deployment of tokens into DeFi projects by institutions and large holders for extended periods. The more effortless movement of assets gives institutions and large holders a clear path to place tokens into DeFi projects for long-term use.

Exchanges and custodians are launching yield products, including wrapped tokens and staking-style services, that allow investors to earn rewards while keeping their XRP locked. The rewards make it far more tempting for holders to keep XRP out of trading circulation.

Analysts stress that even if adoption grows only at a modest pace, billions of tokens could end up sidelined. A tighter supply could result in significantly fewer tokens in circulation, leading to more intense price movements. While there are still technical and regulatory challenges to be faced, the tools for long-term XRP lockups are already available. With momentum building, the supply shock Zach Rector has warned about may arrive sooner than many expect.