Supply shock narrative fuels skepticism as XRP reserves on exchanges hit 8-year low

XRP reserves on centralized exchanges have decreased dramatically in 2025, falling from about 4 billion tokens at the beginning of the year to about 1.6-1.7 billion by December. This represents the lowest level since 2018, which has sparked speculation about whether a supply shock could occur in 2026.

However, analysts warn that lower exchange rate balances alone may not translate into immediate price pressure or sustained appreciation.

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XRP exchange reserve decreased in the historical context

Glassnode data shows that XRP exchange shares fell from 3.76 billion on October 8, 2025 to 1.6 billion at the end of December, sparking a discussion about potential short-term scarcity.

This strong decline coincides with Ripple regularly issues 1 billion XRP Out of escrow on January 1, 2026.

However, historical trends suggest that declines in foreign exchange reserves do not automatically lead to higher prices.

At the end of 2018, XRP reserves were at similar lows, but prices continued to trend lower. Similarly, at the end of 2022, a significant decrease in the reserve failed to trigger a rally until the end of 2024.

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“While the focus remains on the price, the real change has happened in the bottom line… liquidity has been removed. “ “The market has become thinner, more sensitive and more responsive to demand,” said Web3Niels, a market analyst.

In other words, The lower exchange offer primarily relieves short-term selling pressure Instead of creating a new request.

Data coverage and limitations of exchange reports

The supply shock narrative has faced additional scrutiny due to a lack of data. Popular on-chain analytics provider Glassnode tracks a dozen exchanges. However, analyst Leonidas expanded the coverage to include 30 exchanges, finding around 14 billion XRP held across exchanges by the end of 2025. This is much higher than the often cited figure of 1.6 billion.

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“Glassnode’s chart only shows data from 10 exchanges, and only from wallets that have connected to those exchanges… Collecting data from more exchanges, especially those holding billions of XRP, will better reflect reality and any potential trends.” books Leonidas.

This disparity highlights the challenge of relying on limited exchange data. XRP’s high liquidity means that tokens can be transferred quickly on exchanges, making fixed reserve numbers less reliable as indicators of market behavior.

“XRP listed on the order books for sale is dynamic… Sometimes the purchase of $10 million can push the price, sometimes the purchase of $100 million cannot prevent the price from falling.” books Analyzer Vet_X0.

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Ripple’s monthly escrow edition adds another layer to the narrative. On January 1, 2026, Ripple launched 1 billion XRPOf which only about 200-300 million have entered circulation due to a routine re-locking of 60-80%.

With the release fully anticipated, market participants largely saw it as a “non-impact event”, unlikely to lead to significant price changes.

Factors such as XRP ETF flowsinstitutional adoption, and US regulatory developments, in particular The upcoming CLARITY actcan affect the demand for XRP more than fluctuations in exchange reserves.

While XRP reserves remain at 8-year lows, the overall supply picture remains dynamic, and any potential supply shock in 2026 is not guaranteed.