XRP price remains a key focus of conversation in the crypto space, especially as debates swirl around its massive circulating supply and potential deflationary strategies.

Understanding XRP’s Current Supply and Market Cap

Currently, XRP is trading at $3.01 with a circulating supply of 59.14 billion tokens. This positions XRP with a market capitalization of approximately $179.28 billion. Although its original maximum supply was capped at 100 billion tokens, minor reductions have occurred over time. To date, about 14.18 million XRP have been destroyed via transaction fees, reducing the total token count to 99.98 billion.

This incremental burning of tokens has been cited by XRP supporters as evidence of a deflationary system. Proponents also emphasize that escrow releases by Ripple shouldn’t be viewed as adding new tokens to supply. They argue these coins were merely re-locked, not newly minted, thus maintaining a neutral supply impact.

Speculation Around Reducing XRP’s Circulating Supply

The debate around decreasing XRP’s circulating supply isn’t new. Many community members previously floated this idea during price slumps when XRP hovered around $0.50. Although such discussions have quieted since XRP climbed above $3, the prospect of a supply shock still intrigues investors.

Among the most discussed supply-reduction proposals is the idea for Ripple to destroy the 35.60 billion XRP currently held in company escrow—an amount valued over $106 billion. Supporters envision that doing so could catalyze a rise in XRP’s value.

However, Ripple’s CTO David Schwartz has disagreed with this sentiment. He argues that burning such a significant reserve of XRP would not impact the price meaningfully. A historical comparison is often made to Ripple’s competitor Stellar, which eliminated half its supply, only to see a minimal effect on the price of XLM.

Visualizing blockchain data flow during XRP token burns and supply changes

What Would XRP’s Price Be with a 40 Billion Supply?

Let’s consider a speculative scenario in which Ripple and other major holders burn large quantities of their XRP holdings, reducing the circulating supply to 40 billion tokens. If the existing market capitalization of $179 billion were to be preserved, XRP’s price could theoretically surge to $4.48 per token.

This would constitute a noteworthy increase over the current $3 valuation, amounting to a new all-time high for XRP. However, it’s important to emphasize that this model assumes a constant market cap—a condition rarely met in real-world economic behavior.

Historically, token burns often lead to market restructuring. As supply shrinks, valuation may fluctuate depending on investor demand and market sentiment. Without heightened demand to accompany the reduced supply, price may not necessarily respond as projected.

The Roadblocks to a 40B XRP Supply

Despite the theoretical attraction of burning tokens to influence value, the path to cutting XRP’s circulating supply to 40 billion is riddled with challenges. The amount burned via transaction fees is trivial. After more than a decade, this process has only removed approximately 14.18 million XRP, leaving the total token count effectively unchanged at 99.98 billion.

Furthermore, Ripple and other major stakeholders are unlikely to voluntarily destroy vast amounts of their XRP holdings. Doing so would require forfeiting tens if not hundreds of billions in financial assets for a speculative benefit. Given current market prices, erasing 60 billion XRP would equate to eliminating $180 billion in value—a gamble most holders aren’t willing to make.

Related: XRP Price: $12M Max Pain for Bears

In summary, while a hypothetical XRP price of $4.48 based on a 40 billion circulating supply is intriguing, real-world mechanics suggest such an outcome is improbable without a drastic shift in supply-demand dynamics and stakeholder willingness.