2026 is bringing a new debate to the XRP (XRP-USD) community: will the price move because of people using the network, or because the tokens are being locked away? While many XRP holders have long banked on high transaction volume driving value, analysts are now pointing to a massive supply soak as the real catalyst. With billions of XRP being funneled into DeFi, ETFs, and the Flare Network, the available supply is tightening even if the daily usage remains lightning-fast.
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Here is why 2026 may be the year that locked supply takes over the XRP narrative.
Why Fast Settlement Is a Double-Edged Sword for Price
For years, the bull case for XRP was simple: more transactions equals higher price. However, analysts are now flagging a “settlement paradox.” Because the XRP Ledger (XRPL) settles in seconds, money moves too quickly for volume to drive long-term price. As one analyst put it, “Money moves too quickly through the XRPL for volume to drive market value.” In other words, because the tokens are only “in use” for a few seconds at a time, they don’t create the kind of sustained demand needed to push the price into the triple digits based on usage alone.
The Rise of the “Supply Soak” Strategy
If usage isn’t the driver, then scarcity might be. A growing number of analysts from All Things XRP believe the real story for 2026 is the removal of XRP from the liquid market through several major channels. Current projects in the mXRP DeFi space are aiming to lock up $10 billion worth of XRP, while the Flare Network is specifically targeting a lockup of 5 billion XRP by the middle of 2026. Simultaneously, institutional ETFs have already accumulated over 500 million XRP, effectively “warehousing” tokens that would otherwise be traded on a daily basis.
These initiatives are designed to move XRP into systems that do not trade frequently. If successful, this could create a supply-driven price surge regardless of how many people are actually sending XRP across borders. By shifting the asset from active circulation to long-term storage, proponents believe the market will finally see the upward pressure that high-velocity utility failed to provide.
Critics Point to the 15.4 Billion XRP Exchange “Glut”
Not everyone is buying the supply shock narrative. Legal expert Bill Morgan recently dismissed the idea, noting that exchange reserves remain massive. Data shows that 15.4 billion XRP, about 25% of the circulating supply, is still held on 26 major trading platforms. The largest concentrations of these tokens are found on Upbit, which holds 6.25 billion XRP, followed by Binance with 2.52 billion and Bithumb with 1.82 billion.
Morgan argues that as long as 15% of the total supply is sitting on exchanges, XRP is “far from scarce.” He also noted that ETFs currently hold less than 1% of the total supply, suggesting that the market has not yet met the specific conditions required for a supply-driven price surge. For these critics, the “glut” of available tokens on Asian exchanges remains a significant barrier to any theory involving immediate token scarcity.
Key Takeaway
The key takeaway from this is that the XRP narrative is shifting from utility to scarcity. If the Flare Network and mXRP successfully lock away billions of tokens by mid-2026, the reduced supply could force a price move even if network volume stays flat. However, for a real supply shock to occur, the massive reserves on exchanges like Binance must begin to dry up, which is something that hasn’t happened yet.
At the time of writing, XRP is sitting at $1.9030.
