Technical Analysis of the Reduction in XRP Supply
The XRP Ledger protocol incorporates an intrinsic deflationary mechanism through the destruction of a small fraction of XRP in each successful transaction. Specifically, 0.00001 XRP is permanently removed from circulation with each transaction.
Recent blockchain data reveals an acceleration in this process, with approximately 18 million XRP burned in a recent period. This continuous burning, although incremental per transaction, results in a gradual reduction of the total supply and, consequently, the circulating supply of the asset.
Technical Impact on Circulating Supply:
The reduction in circulating supply, estimated at $9.5 million based on current prices, is a fundamental factor in the tokenomics of XRP. Theoretically, a decrease in supply, while maintaining or increasing demand, can exert positive pressure on the asset's price in the long term.
On-Chain Analysis and Movements of Large Holders:
Reports from Arkham Intelligence suggest a price forecast of over $5 for XRP by 2026. This projection may be correlated with the observation that whales are accumulating XRP through Over-The-Counter (OTC) trading platforms.
The use of OTC platforms by whales generally indicates large volume transactions aimed at minimizing the impact on the market price. This quiet accumulation, combined with the supply reduction driven by the burning mechanism, may suggest an expectation of future appreciation by these large investors.
Technical and Speculative Implications:
The combined effect of token burning and potential accumulation by whales reinforces the scarcity narrative. From the perspective of fundamental technical analysis, the reduction in supply is a bullish catalyst. However, it is crucial to note that the price is also influenced by regulatory factors, technological developments within the Ripple ecosystem, and the overall sentiment of the cryptocurrency market
