Have you ever considered the massive amount of XRP flooding the market? If you’re an investor, these are the questions you need to ask yourself. So, the big question is, “Will the large amount of XRP supply hurt the value?” The short answer is yes, and I’ll prove it with data and math as we read through the article.
XRP Supply
1st let’s dig in and take a look at the supply. XRP has a max supply of 100 billion tokens. Currently, the circulating supply is around 62 billion. The unaccounted coins are held in escrow until they’re distributed monthly.
XRP Supply Metrics:
- Circulating supply: 61.98 billion
- Total supply: 99.98 billion
- Max supply: 100 billion
This is a massive amount of supply compared to Bitcoin, for example.
Bitcoin Supply
In comparison, let’s take a look at Bitcoin. Bitcoin’s circulating supply is around 20 million.
Bitcoin Supply Metrics:
- Circulating supply: 20 million
- Total supply: 21 million
- Total supply Issued: 95%
100 billion total supply vs 21 million is a massive difference. Eye-watering if you think about it, considering all the hype around XRP.
XRP Market Cap
Today, XRP’s market cap value is around 75.37 billion. During the last peak run-up, XRP’s market cap reached around 203 billion. This was when the XRP price briefly hit $3.40.
Below is the XRP market cap chart on the 2-week chart.
Something to note, too, even with all the lawsuits settled and positive news for Ripple. Looking at the market cap chart. You can see that in the last cycles, the mark cap was just barely higher than it was 2 cycles ago.
Bitcoin Market Cap
Here’s Bitcoin’s market cap chart for comparison on a 2-week chart.
Bitcoin’s market cap chart is totally different than XRPs. Looking at the Bitcoin market cap chart, you will see that the market cap increases per cycle, whereas you don’t see that with XRP.
Math Analysis for XRP
To me, here’s the proof that XRPs’ large amount of supply does suppress the value. The math behind cryptocurrency valuations relies on market cap, which measures the total value of all circulating coins and tokens.
Here’s more on how to calculate market cap and price targets for cryptocurrencies.
Formulas
To find the value (market cap) of a crypto asset, multiply its current price by its circulating supply.
Price x Circulating Supply = Market Cap
Example: The current price for XRP is $1.23, and the circulating supply is 61.98 billion. The total market cap of XRP is right at $75.1 billion.
To find the theoretical price if a cryptocurrency were to reach a specific valuation (such as another coin’s market cap), use the formula below.
Target Market Cap / Circulating Supply = Target price
These are the foundational core formulas used to calculate crypto evaluations. This is the industry standard math for crypto evaluations.
Technical Analysis
With all the talk about XRP hitting $100 next cycle. Let’s see if the math adds up. If you take $100 (price) x 61.98 billion (current supply in circulation), you get a market cap of $6.1 trillion.
For XRP to hit $100, its market cap would have to hit 6.1-10 trillion dollars, depending on whether you use current or total supply. Is this possible in the next 10 years or less? I say no, considering XRPs highest market cap was 203 billion. The math just doesn’t add up for XRP to hit $ 100 in the next 10 years.
Experiment #2
Here’s one more example of whether XRP can possibly reach $10 next bull run. Let’s see if this is even realistic. XRP’s market cap would have to reach 610.8 billion. During the last bull run, XRP’s market cap reached 203 billion at its peak. For XRP to hit $10, its market cap would have to triple from its peak.
Market Cap Re-examined
Looking at the XRP market cap chart, the odds of the market cap doubling in a cycle are slim, and of it tripling are a long shot. This cycle, the market cap was barely higher than 2 cycles ago. XRP needs a market cap spike like the one in 2017 to propel prices to $10 or higher.
My opinion is that there’s just too much XRP supply to achieve high evaluations. Even David Swartz, one of the original architects of XRP, has recently stated that XRP wasn’t designed to be scarce or to function as a store of value like Bitcoin.
I want my friends and investors to understand the big picture of XRP. It has its uses, but was never designed for value. I’m not stating you can’t make money off XRP. You can just like we all did last cycle.
