An XRP community pundit recently estimated how much buy pressure would clear out the leftover retail XRP holdings.
Following reports suggesting that Ripple is leading a fundraising effort to buy up to $1 billion worth of XRP, discussions around an imminent XRP supply shock have resurfaced within the community.
Retail Investors in Focus as Ripple Proposes $1B XRP Buyback
For context, Bloomberg reported last week that Ripple was looking to raise $1 billion for the establishment of an XRP treasury, with plans to leverage some of the XRP tokens in its escrow. Expectedly, the report triggered excitement among XRP proponents, leading to several speculative discussions, with the supply shock theory being one of them.
Following the report, an XRP proponent called attention to a previous projection by community figure Baba Cugs. In this projection, Baba Cugs speculated that the first step toward a meteoric XRP price surge would be clearing out retail investors.
Notably, several XRP community pundits have suggested that as institutional investors troop into the XRP market on the back of regulatory clarity, retail investors have been selling their tokens to these institutions. As a result, retail holdings have drastically reduced. Alpha Lions Academy founder Edoardo Farina even insisted that retail is gradually being priced out.
Meanwhile, a community expert who calls himself XRP Liquidity has continued to track retail holdings, suggesting that this class of investors currently only holds 500 million to 1.9 billion XRP tokens. On the back of discussions around an exhaustion of the retail supply, he noted that it would take more than the proposed $1 billion buy from Ripple.
How Much Would It Take to Clear Out XRP Retail
For context, at the current price of $2.43, it will take $1.2 billion to clear out retail investors if they hold 500 million XRP, and about $4.617 billion if they hold 1.9 billion tokens. However, it would not be this straightforward, as not all retail investors would sell at this price.
Instead, the expert estimated that most retail investors could first start selling off their holdings at $5, possibly to take profits. He estimated that at this $5 price, $1 billion would only purchase 200 million XRP tokens. Meanwhile, if others decide to sell their tokens at $7.5, this same $1 billion would procure 133.33 million XRP.
Further, if another set of retail investors chooses to take profit at $10, a similar $1 billion investment would buy 100 million XRP. Notably, at $15, the same $1 billion fund will amass 66.6 million XRP. Meanwhile, if other retail investors decide to sell off their holdings at $20, another $1 billion investment would buy 50 million XRP.
Together, institutions like Ripple would need to spend $5 billion to buy 550 million XRP from retail holders for prices ranging from $5 to $20. However, the analyst confirmed that if retail investors hold 1.9 billion instead, then institutions would need $17.7 billion to clear out all of retail. Nonetheless, this is only if all retail investors choose to sell.
Notably, according to Baba Cugs, once institutional buyouts have cleared retail investors, the XRP price could witness “one giant leap” overnight. Also, XRP Liquidity projected in a previous commentary that institutions could push the XRP price to $20 to entice retail investors to sell.
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