XRP Price Could Surge if 30% of XRP Is Staked, Creating a Supply Squeeze
The price of XRP, the native cryptocurrency of the Ripple network, may experience a significant increase if investors lock up 30% of the circulating supply in staking contracts, removing a substantial portion of tokens from active trading. Currently trading at approximately $1.28, XRP has faced considerable headwinds this year, with its price down nearly 30%. However, recent analysis suggests that a supply shock prompted by staking could ignite a strong bullish rally.
Current XRP Supply and Potential Impact of Staking
As of now, the XRP circulating supply stands at roughly 61.1 billion tokens. If 30% of these tokens—around 18.33 billion—were staked and effectively locked away, only about 42.77 billion XRP would remain liquid and available for trading. This reduction in circulating supply could lead to a liquidity crunch, which market observers believe would directly influence XRP’s price dynamics.
Understanding the Price Mechanics: The Role of Velocity and Liquidity
An AI-driven assessment by Google’s Gemini chatbot sheds light on how this scenario might unfold. The chatbot referenced the Equation of Exchange (MV = PQ), where:
- M = money supply,
- V = velocity of money (how fast tokens circulate),
- P = price level, and
- Q = transaction volume.
If the money supply (M) stays constant but velocity (V) decreases because a significant portion of XRP is staked and no longer widely traded, then the price (P) must rise to maintain transaction demand (Q). Effectively, fewer tokens moving through the market means larger price movements are needed to accommodate ongoing demand.
Exchange Liquidity and Order Book Effects
Gemini highlighted that a large fraction of XRP’s circulating supply typically resides on cryptocurrency exchanges. Locking up 30% of supply could reduce liquid exchange supply by 60% to 70%. Thinner order books would mean that buy orders, which formerly nudged prices by about 1%, might drive prices up by 5% to 10%, resulting in sharper and more volatile price movements.
Furthermore, staking tends to shift holder behavior, encouraging longer-term holdings rather than short-term trading. This could dampen panic selling during market downturns, as stakers prioritize earning yields over reacting to price swings.
Price Forecasts Given a Supply Crunch
Based on these factors, Google Gemini projects a bullish XRP price range of between $7.50 and $11.00. A $7.50 price level represents roughly a sixfold increase from current levels. These projections draw parallels to historical crypto supply shocks, such as Bitcoin’s halving cycles, where constrained supply triggered substantial rallies despite a large amount of coins remaining in circulation.
At the higher end of the range, $11 could be reached if demand for XRP, especially for use cases like cross-border payments, remains steady or grows while liquid supply falls drastically. Sellers in such a market environment may raise prices due to scarcity.
The Reality of XRP Staking Today
It is important to note that the XRP Ledger does not support native Proof-of-Stake (PoS) mechanisms. XRP uses its own consensus protocol rather than Proof-of-Work or Proof-of-Stake. Therefore, tokens are not staked to secure the network or earn native rewards.
That said, Ripple has discussed introducing a two-tier rewards model potentially launching around late 2025 to provide incentives without compromising decentralization. Meanwhile, external protocols like Flare Network offer third-party staking-like services, allowing XRP holders to earn yields by integrating XRP into DeFi-like systems.
Major centralized exchanges like OKX, Binance, and Uphold currently offer XRP holders yield-bearing products with interest rates ranging roughly from 1% to 4% APY, depending on lock periods and terms. These are currently the most accessible ways for XRP holders to earn yield by effectively locking tokens.
Conclusion
While XRP has faced challenges in the market this year, a potential staking-driven lockup of 30% of tokens could reduce circulating supply enough to cause a meaningful supply crunch. This would thin order books, increase price volatility, and potentially set the stage for a strong price rally. Projections by AI analysis suggest a possible increase to the $7.50–$11 range—representing as much as a six- to eight-fold increase over present prices.
However, native staking on XRP Ledger remains a future prospect, with current lockup options primarily coming from centralized exchanges and sidechain services. Investors will need to watch for developments around Ripple’s proposed reward models and monitor whether substantial amounts of XRP become locked up through staking or lending protocols to gauge the potential for such a supply-driven price movement.
For the latest updates on XRP and other cryptocurrencies, stay tuned to Crypto News.