$XRPcommunity figure Zach Rector says the long-discussed $XRPsupply shock is no longer just a meme but starting to materialize.

In a recent update, Rector noted that DeFi projects like Flare Network’s FXRP are now locking up massive amounts of $XRP. This implies the token’s freely tradable supply is shrinking faster than many realize.

Rector disclosed that he recently minted $100 worth of FXRP, on top of $90 minted last week, as part of his experiment with the Flare ecosystem.

A previous report from The Crypto Basic confirmed that more than $43 million worth of $XRPhad already been bridged onto the network to mint FXRP as of October 8. Today, that figure has increased to $56 million atcurrent market rates, representing roughly 20 million FXRP in circulation.

$56M $XRPis on Flare now.

— Hugo Philion ?? (@HugoPhilion) October 9, 2025

Notably, the project currently maintains a weekly minting cap of 5 million FXRP, which has been consistently sold out within hours. The first 5 million allocation was fully minted in four hours, and the most recent round reached its cap in just three hours.

This highlights the enthusiasm among $XRPholders seeking yield opportunities without selling their tokens.

Why This Matters for $XRP’s Circulating Supply

While each FXRP minted represents $XRPlocked away on the $XRPLedger, analysts argue that this process could significantly reduce the amount of $XRPavailable for trading.

Philion revealed that Flare aims to secure up to 5% of $XRP’s total supply through its FXRP system. This development aligns with widespread community warnings about an impending $XRPsupply crunch.

Earlier, $XRPcommentator Chad Steingraber suggested that only 21 million $XRP, comparable to Bitcoin’s total supply, may eventually remain available for public trading.

He highlighted that Axelar’s mXRP aims to manage $10 billion in $XRP, while Flare’s FXRP is targeting 5 billion $XRPby mid-2026. Combined, the two projects could lock up 8 billion $XRP, roughly 13% of the current circulating supply.

Shrinking Exchange Balances and Institutional Accumulation

The potential supply shock comes amid sharp declines in $XRPexchange balances. Coinbase, for instance, saw its $XRPreserves plunge by over 96% in less than three months.

Meanwhile, institutional interest is accelerating. Asset managers like 3iQ and REX-Osprey already hold millions of $XRPvia ETFs. Additionally, as many as seven spot $XRPETFs are launching soon.

Companies, including VivoPower and Wellgistics, have also announced plans to hold $XRPas a reserve asset.

The Beginning of the $XRPSupply Shock Era

According to Rector, this is “just getting started”. As more $XRPtokens go into DeFi protocols, institutional funds, and long-term reserves, the liquid supply available for open-market trading could dwindle fast.

Interestingly, hypothetical estimates suggest $XRPprice could soar to four digits if only 21 million tokens are publicly available for trading.

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