We recently evaluated how high the XRP price could soar if XRP ETFs absorb 5% of the total XRP supply.
Notably, ETF discussions have again dominated the crypto scene after Solana recently witnessed the launch of two U.S.-based exchange-traded funds (ETFs): the Bitwise Solana Staking ETF (BSOL) and the Grayscale Solana ETF (GSOL) last month.
The move brought Solana into the institutional spotlight and showed growing interest in alternative crypto assets beyond Bitcoin and Ethereum. On its debut, the Bitwise Solana ETF saw an impressive $69.45 million worth of inflows. However, its Grayscale counterpart, GSOL, fell short with only $4 million in inflows.
Amid the anticipation of a launch, several market experts have already begun assessing how much capital these products could bring into the XRP market. Notably, if XRP ETFs follow Solana’s projections and absorb 5% of XRP’s total supply, the impact on price could be immense.
For context, if XRP ETFs scoop up 5% of the total supply, they would absorb roughly 4.95 billion XRP. With XRP currently trading around $2.20, this amount equals about $12.3 billion worth of tokens removed from the open market. While this potential supply squeeze sounds significant, the potential impact on price remains unclear.
Notably, a $12.3 billion capital inflow into the XRP market would not lead to an equal $12.3 billion increase in market cap due to the inflow-to-valuation multiplier effect. This multiplier often ranges from 50x to 300x, depending on market and liquidity conditions during capital inflows or outflows.
Interestingly, Dom, a prominent order book expert, confirmed in May that just $61 million worth of capital inflows led to a $16.6 billion increase in XRP market cap. For perspective, this translates to an inflow-to-valuation multiplier of about 272x. There are days XRP sees multipliers as high as 300x and days the figure drops below 100x.
To keep things moderate and realistic, our assessment assumes a multiplier effect of just 70x. If XRP ETFs absorb 5% of the total XRP supply, amounting to $12.3 billion in inflows, this could lead to an increase of $861 billion for XRP’s market cap, considering a 70x multiplier. With XRP’s valuation currently at $150 billion, this addition will lead to a new market cap of $1.011 trillion.
Today, XRP has a circulating supply of about 60 billion tokens, resulting in a price of $16.85 per token at a $1.011 trillion market cap. This price would represent a 574% increase in the current XRP price.
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