Analysts Warn of Impending XRP Supply Crunch as OTC Liquidity Tightens and ETFs Absorb Supply

Businessman and investor Jake Claver has issued a warning that is intensifying speculation about a potential supply crunch in the XRP market. In a post on X, Claver stated that "Trades on OTC for XRP are taking longer than usual to settle," suggesting liquidity in over-the-counter markets, where institutions typically acquire large blocks of XRP, is tightening.

This warning follows Claver's recent podcast appearance where he explained institutional demand is rapidly consuming available XRP supply outside public exchanges. He revealed that only between one and two billion XRP remain accessible across OTC desks and dark pools. According to Claver, the launch of several XRP spot ETFs dramatically accelerated this depletion, with roughly 800 million XRP reportedly absorbed within the first week of ETF activity.

Claver framed this sudden drawdown as a sign that institutional accumulation is ramping up more aggressively than many realize. He explained that once the remaining OTC liquidity is exhausted, institutions will be forced to source XRP from public exchanges, which could put upward pressure on XRP's price due to far more limited liquidity on open markets.

Separately, analyst Stern Drew describes XRP as entering a "liquidity compression flywheel" - a self-reinforcing cycle where reduced supply drives price increases. The first stage involves ETFs absorbing XRP at a steady pace, removing tokens from circulating supply and reducing market liquidity. As more XRP moves into ETFs, exchange reserves decrease, leading to thinner sell walls and making the asset's price more responsive to demand.

Drew notes that Ripple's regulated stablecoin, RLUSD, adds another layer to this cycle by facilitating seamless on-chain liquidity flows, creating continuous demand for XRP through settlement transactions. The integration of Zero Knowledge (ZK) identity protocols further enhances XRP's utility in regulated, high-value financial transactions.

The final phase involves institutional custody, where banks and asset managers holding XRP in regulated custody further shrink circulating supply. By combining reduced supply, real-world utility, and institutional adoption, analysts suggest XRP's liquidity dynamics could drive significant price movement once the cycle reaches full speed.