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- FalconX’s acquisition of 21Shares links deep OTC liquidity with rising ETF demand.
- The new XRP ETF may convert large OTC reserves into long-term custody holdings.
- Sustained inflows could tighten supply and create future price pressure.
The launch of the 21Shares XRP ETF has reignited debate around FalconX’s acquisition of 21Shares and whether the combined firms could set the stage for an XRP supply squeeze. The discussion resurfaced shortly after the ETF went live on Dec. 11, prompting fresh scrutiny of FalconX’s role in the institutional XRP market.
FalconX Expands Its Reach With 21Shares Acquisition
FalconX already serves more than 2,000 institutional clients and operates one of the industry’s largest OTC, liquidity, and derivatives infrastructures. Its deep OTC pools—holding billions of XRP used by whales and institutional desks—allow large trades to settle privately without disrupting public markets.
By acquiring 21Shares, FalconX gains a new channel to route XRP directly into regulated ETFs. 21Shares has an established history of building and managing crypto exchange-traded products across multiple global markets. The merger creates a tighter pipeline between institutional liquidity and retail-facing investment products.
ETF Inflows May Draw on FalconX’s XRP Reserves
The new 21Shares XRP ETF (TOXR) requires sizable physical XRP holdings to back shares. The initial launch already demanded millions of tokens, and further inflows would require even more—potentially in the hundreds of millions as assets under management grow.
Because 21Shares now sits under FalconX, it can source XRP directly from FalconX’s OTC reserves. This efficient loop means:
- Investors purchase ETF shares
- Brokers redeem them
- FalconX supplies the XRP
- Tokens move from OTC pools into long-term ETF custody
This dynamic removes XRP from liquid circulation. Community analysts argue that if ETF demand accelerates, FalconX’s reserves could shrink rapidly, pushing more buyers to public exchanges where available supply is much thinner.
Could This Lead to an XRP Supply Squeeze?
The setup resembles Bitcoin’s run after its ETF issuers pulled large volumes from public markets in early 2024. While the macro environment will still influence sentiment, recent on-chain data—including $1 billion in assets across existing XRP ETFs—suggests institutional appetite remains strong.
If inflows persist and reserves continue transferring into ETF storage, market observers believe XRP could face upward price pressure over time.
FalconX’s takeover of 21Shares tightly links institutional XRP liquidity with the newly launched ETF. Whether it triggers a supply squeeze depends on demand, macro conditions, and how quickly tokens shift into ETF custody. But early signs show rising interest, and the market is watching closely.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
I’m a crypto enthusiast with a background in finance. I’m fascinated by the potential of crypto to disrupt traditional financial systems. I’m always on the lookout for new and innovative projects in the space. I believe that crypto has the potential to create a more equitable and inclusive financial system.
