XRP (XRP 4.64%) is about to experience an interesting tug of war over its supply. On one side are the predictable monthly coin supply releases from escrow by XRP's issuer, a company called Ripple. On the other side are the world's first XRP treasury companies, which are start-ups whose sole purpose is to stockpile the coin and sit on it to capture its price appreciation over time.
That second force is small today. But the very fact it now exists when it didn't before creates incremental, structural demand for a coin whose floating supply is otherwise set to expand. If you can handle a three-year holding window and an investment as small as $1,000, the odds are thus very favorable that demand will win out in your favor if you buy the coin. Let's explore why.
Meet the new XRP treasurers
A crypto treasury company is a publicly traded business that raises capital, buys a digital asset like XRP, and thereby offers its shareholders levered exposure to the underlying asset's price. This approach was first used by Strategy with Bitcoin, and now the same model is being attempted by a few enterprising companies with XRP.
In late May, the solar power and storage business VivoPower pivoted to become the world's first XRP-focused treasury company, closing a $121 million private placement-funding round and then in early June specifically allocating $100 million to purchase XRP in an over-the-counter (OTC) deal. And it isn't alone in picking XRP as its treasury asset, at least not any more. Within 24 hours of VivoPower's announcement, two other small companies, Ault Capital Group and an Asia-based logistics holding business, disclosed plans to buy XRP as a strategic reserve asset.
Why bother with holding coins when there are other ways to make money that don't rely on the vagaries of the market to generate a return?
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Although it's yet to be proven successful, except in the case of Strategy, generally crypto treasury companies argue they can outperform just holding their underlying assets directly by issuing equity or convertible debt, buying coins, and capturing any upside on behalf of shareholders. Those shareholders are effectively making a leveraged bet on the crypto by buying the company's stock, so it's true that their returns could be higher than just holding the coins directly.
Here's the math to know
How much impact will these new treasury companies have on XRP's supply relative to what's being released from escrow each month? If the answer is "close to zero," then the coin's critics can retain one of their arguments against buying it. On the other hand, if the treasurers are taking a large amount of supply off the table, it would be another argument in favor of buying and holding the coin.
Ripple still controls about 36.5 billion XRP in escrow and, by design, unlocks about 1 billion tokens on the first day of each month. Historically, roughly 800 million of that haul are relocked, leaving a net 200 million XRP that can hit the market and boost supply and depress prices. So there's an inflationary element of XRP that is relatively minor in the big scheme of things.
Compare that with VivoPower's initial $100 million purchasing goal for the asset. At today's XRP price of about $2.25, it can buy roughly 44 million XRP. In other words, a single new treasury entrant can sop up roughly 20% of a typical month's net supply increase. Layer in similar moves telegraphed by other aspiring crypto treasury companies, and supply can start to tighten rather quickly, at least for as long as there's a steady drumbeat of new entrants making big purchases.
Critics counter that treasury companies are leveraged, thinly capitalized, and prone to dumping if XRP's price plunges, which is a fair point. It's also the case that Ripple could decide to sell more of each month's escrow if prices surge.
Nonetheless, the key is that demand pressure from buyers now has a persistent, deep-pocketed corporate source instead of relying solely on retail traders and banks. And that's bullish.
The setup looks favorable here
Assuming the XRP treasury club grows, three tailwinds could reinforce the thesis for buying $1,000 of the coin and holding it for at least three years.
First, the approval of a U.S. exchange-traded fund (ETF) application is widely expected sometime in 2025. An approval would ignite institutional demand the way Bitcoin ETFs did. It's not guaranteed, but it's no secret that the new administration's leaders are very friendly toward crypto.
Second, the supply unlock schedule itself is finite and not very scary at all. If the unlocking pace persists as it has, Ripple's remaining stash of XRP will eventually run dry. The monthly supply drip could then end entirely, leaving crypto treasurers, remittance banks, and everyone else to fight over a fixed supply. That would drive prices up.
Finally, competition among treasurers is now accelerating. Corporate executives hunting for their own version of Strategy's moment of popularity may decide XRP's utility for making payments are safer than an all-Bitcoin bet.
Of course, none of this insulates investors from volatility. That's why a $1,000 starting stake is worthwhile; it keeps your exposure modest while still letting you participate in the upside if demand outruns new supply.
Patience is the key here. Give the tug-of-war three years to play out, and the coin's price will likely be a lot higher than it is right now.
