Researchers Claim That Most of Ripple’s (XRP) “Circulating Supply” Is Illiquid, Market Cap Is Overestimated by $6.9 Billion

January 25, 2019 / by Zachary Mashiach

An investigation by Messari Research has concluded that the true circulating supply of Ripple (XRP) is 21.8 billion versus the 41 billion Ripple (XRP) displayed on CoinMarketCap. If this is true, it means that Ripple (XRP) has a market cap of $6.9 billion, well behind Ethereum’s (ETH) $12.2 billion market cap. Further, if this data is accurate then the Ripple (XRP) market is even more centralized than previously thought, with 78.2 billion XRP under centralized control versus the commonly published 59 billion XRP figure.

There is 52.5 billion XRP in long term escrow, and 6.5 billion XRP is available for restricted sale, which yields 59 billion XRP under centralized control by Ripple Labs. This is the commonly known figure published on sites like CoinMarketCap. It indicates a high degree of market centralization, especially when considering that the buy support for Ripple (XRP) is only $14.5 million according to CoinMarketBook, while the 59 billion XRP under centralized control is worth $18.7 billion. This makes the Ripple market extremely susceptible to centralized dumping.

Essentially, Ripple Labs is suppressing the Ripple (XRP) price long term for personal gain.

It gets worse, according to Messari Research. Jed McCaleb, the Co-Founder of Ripple (XRP), who left Ripple Labs and went on to become a co-founder of Stellar (XLM), has tight selling restrictions on the 6.7 billion XRP he owns. Further, Ripple (XRP) Co-Founder Chris Larsen said he would donate 5.9 billion XRP to RippleWorks, which is a charity organization, but the donation has not yet taken place. This means these 5.9 billion XRP are illiquid as well.

Additionally, Ripple Works already holds 2.5 billion XRP, and these have daily selling restrictions and are relatively illiquid. Also, 4.1 billion XRP sold by Ripple Labs’s money service business XRP II is subject to selling restrictions and relatively illiquid. Adding all these relatively illiquid XRP together yields 19.2 billion XRP.

There might be an additional 3.6 billion XRP held by Chris Larsen and 1 billion XRP held by Arthur Britto based on the initial allocations to the Co-Founders of Ripple (XRP), but there is no way to know how much of this was spent, and Messari research does not include these XRP in its calculations.

In total, this means that at least 78.2 percent of the total Ripple (XRP) supply is relatively illiquid and not truly circulating. The 78.2 billion relatively illiquid XRP is worth $24.7 billion, versus the $6.9 billion market cap of the Ripple (XRP) in circulation.

It seems illogical to invest in Ripple (XRP), since centralized dumping will be sucking money out of the market long term. It makes much more sense to invest in cryptocurrencies with decentralized supplies like Bitcoin (BTC), Litecoin (LTC), and Dogecoin (DOGE), among many others.

This research also teaches an important lesson. The total crypto market cap on CoinMarketCap is likely inflated. Ripple (XRP) is currently ranked number two, yet somehow the circulating supply figures and market cap have been incorrectly displayed for years. It is possible that other cryptocurrencies have similar miscalculations. Currently the total crypto market cap on CoinMarketCap is $119.4 billion, but based on this research it is at most $113.3 billion.