XRP's Theoretical Price Potential in a Supply-Adjusted Scenario: A Token Economics Perspective

In late 2025, XRP occupies a unique position in the cryptocurrency market, with a market capitalization of $112.93 billion and a circulating supply of 60 billion tokens. This valuation reflects a dramatic shift in institutional and retail demand, including inflows into U.S. spot XRP ETFs, and follows a landmark legal settlement with the U.S. Securities and Exchange Commission that resolved a four-year regulatory battle. To assess XRP's theoretical price potential, we must analyze its token economics-particularly its supply dynamics-and compare them to Bitcoin's fixed supply model.

XRP's Supply Dynamics: A Structured Approach to Scarcity

XRP's total supply is capped at 100 billion tokens, with 59 billion in circulation as of 2025. Ripple Labs manages the remaining 41 billion through escrow contracts, releasing 1 billion XRP monthly while relocking unused tokens to maintain supply stability. This structured approach contrasts sharply with Bitcoin's hard-capped supply of 21 million coins, where scarcity is enforced through halving events and mining rewards.

Ripple's escrow mechanism has proven pivotal in shaping XRP's price action. For instance, a 500 million XRP lockup in 2026 removed over $1 billion from circulation, contributing to a price surge above $2 and renewed investor confidence. By comparison, Bitcoin's supply is entirely algorithmic, with no centralized control over token distribution. While Bitcoin's scarcity is absolute, XRP's supply is engineered to align with network utility growth, creating a different kind of scarcity-one driven by controlled release and institutional demand.

Scarcity-Driven Valuation: XRP vs. Bitcoin

To model XRP's price potential under reduced supply dynamics, consider the following:
1. Escrow-Driven Scarcity: Ripple's monthly escrow releases are offset by relocking mechanisms, ensuring that only a fraction of the total supply is available for trading at any given time. This creates a de facto scarcity, as the circulating supply grows at a slower rate than the total supply.
2. Transaction Fee Burns: While XRP's burn rate is minimal approximately 2,700 tokens daily, it still applies a gradual deflationary pressure. At current activity levels, this mechanism removes roughly 1 million tokens annually, a figure that could rise with increased network adoption.
3. Institutional Demand: The $18 billion inflow into XRP's market cap over a week in late 2025 underscores the asset's appeal to institutional investors, particularly in the wake of regulatory clarity. This demand could further compress the effective circulating supply, driving prices higher.

Comparing XRP's supply-adjusted valuation to Bitcoin's, we find that XRP's market cap-to-circulating supply ratio is significantly lower. As of December 2025, Bitcoin's market cap of $1.65 trillion is supported by a circulating supply of 19.97 million BTC, yielding a ratio of ~$82,900 per BTC. XRP's ratio, at ~$1.85 per token, suggests substantial upside if demand continues to outpace supply growth.

Regulatory Risks and Long-Term Structural Advantages

The SEC's 2025 settlement resolved critical legal uncertainties, allowing U.S. exchanges to relist XRP and signaling a potential shift in regulatory policy. However, risks remain. While the court ruled that XRP is not a security when traded on public exchanges, future regulatory actions could reintroduce volatility. That said, XRP's structured supply model offers a long-term advantage: predictable scarcity. Unlike Bitcoin, which relies on algorithmic halvings to reduce supply, XRP's supply adjustments are proactive, enabling Ripple to respond to market conditions and institutional demand.

Theoretical Price Projections

Under a supply-adjusted scenario, XRP's price could rise if:
- Escrow Releases Slow: If Ripple reduces the rate of escrow releases or increases relocking, the circulating supply would grow more slowly, amplifying scarcity.
- Burn Rate Increases: Higher transaction volume would accelerate token burns, further reducing the effective supply.
- Institutional Adoption Expands: Greater demand from ETFs and institutional portfolios could compress the circulating supply relative to demand.

Using Bitcoin's market cap-to-supply ratio as a rough benchmark, XRP's price could theoretically reach $2.50 if its market cap grows to $150 billion while maintaining a circulating supply of 60 billion. A more aggressive scenario-assuming a market cap of $300 billion and a circulating supply of 50 billion-would push the price to $6.

Conclusion

XRP's token economics present a compelling case for scarcity-driven valuation. While its supply model differs from Bitcoin's fixed supply, Ripple's structured approach to escrow, relocking, and transaction burns creates a unique form of scarcity that aligns with network utility. Regulatory risks persist, but the 2025 settlement has cleared a major hurdle, enabling XRP to capitalize on institutional demand. In a supply-adjusted scenario, XRP's price potential is substantial-particularly if supply growth slows and demand accelerates.