XRP price experienced a decline as Ripple unlocked 1 billion tokens from its escrow account. This move, a long-term strategy to manage the token supply, is designed to enhance transparency and predictability in the market. Despite this intention, the immediate market reaction reflected a cautious sentiment among investors.
XRP Price Dips as Ripple Unlocks 1 Billion Tokens
On the first day of September, Ripple made a move by releasing 1 billion XRP tokens through its well-coordinated escrow process. The transaction, executed in three phases within minutes, released 500 million, 200 million, and 300 million XRP tokens, respectively.
These tokens, valued at over $560 million, were distributed from “Ripple 24” wallet, which has been active for over seven years.
The first transaction occurred at 02:46:22 UTC, releasing half a billion tokens valued at approximately $280 million. The second and third disbursements swiftly followed, ensuring that a substantial amount of XRP was injected into the market.
Due to this large-scale release and increased market volatility, the XRP price slightly declined, trading at $0.5569, a 2.26% decrease from the previous day.
David Schwartz, Ripple’s Chief Technology Officer, has openly discussed the escrow mechanism implemented in 2017. At that time, the company secured 55 billion XRP in several escrow accounts to manage the supply effectively.
The intent was to release 1 billion XRP monthly to diminish the hold on the supply and foster decentralization. However, Schwartz has expressed mixed feelings about the effectiveness of this strategy.
In earlier statements, he reflected on the company’s initial objective to expedite the reduction of its XRP holdings and contemplated the long-term impact of such releases.
Market Response and Analysis
Moreover, analysts observed that the unlocked tokens remained within the “Ripple 24” wallet, indicating no immediate plans for further distribution. This action mitigated a steeper price drop, as the tokens were held in reserve.
While the unlock could potentially increase liquidity, it also raises concerns about price stability. More so, the crypto company use of escrow aims to balance the supply with predictable releases.
XRP enthusiast David Baker observed that with the influx of XRP into the market, a notable sell-off could be imminent, potentially leading to a decrease in price. Additionally, analyst Nilesh Rohilla remarked that the releases are puzzling to investors, prompting him to pronounce “RIP to XRP.
In addition, the bullish forecast for XRP price hinges on the potential repetition of a historical pattern observed in 2020. If XRP breaks out from its current falling wedge setup, it could replicate the 742% surge seen previously, potentially elevating XRP price to $4.
This scenario aligns with the crypto company initiatives with small banks and could signal a new peak for the crypto.
Ronny Mugendi
Ronny Mugendi is a seasoned crypto journalist with four years of professional experience. He has worked extensively with various media outlets on cryptocurrency trends and technologies. When he’s not analyzing the latest crypto developments, Ronny enjoys the thrill of bike riding, exploring new trails and landscapes.
Disclaimer: The presented content may include the personal opinion of the author and is subject to market condition. Do your market research before investing in cryptocurrencies. The author or the publication does not hold any responsibility for your personal financial loss.