Ripple, the US-based cross-border payment firm, has recently unlocked 1 billion XRP from escrow, potentially impacting the token’s price trajectory and circulating supply. This move comes at a critical time for XRP, as uncertainty surrounds its future. While XRP has seen some positive movement alongside the broader cryptocurrency market over the past week, concerns linger about the next bull run.
Unlocking XRP: Implications for Price and Supply
Data from Whale Alerts reveals that three transactions from two separate wallets (known to be Ripple escrow) have unlocked a total of 1 billion XRP coins. The unlocking consisted of 400 million XRP, followed by 100 million XRP, and finally 500 million XRP. In total, the unlocked tokens are valued at over $514.6 million based on the current market price of XRP.
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This unlocking process is part of Ripple’s plan to gradually release 55 billion XRP tokens over 55 months. The company claims that the monthly release is meant to enhance liquidity.
However, it also introduces a significant influx of new coins into circulation, potentially putting downward pressure on the price as demand struggles to keep pace. Historical data shows previous instances of price declines around escrow unlocking events.
Managing Escrow and Its Effects
Ripple has implemented measures to mitigate potential selling pressure caused by new tokens entering the market. After unlocking tokens, the company usually relocks about 80% of the released tokens back into escrow, reducing immediate selling pressure. Howbeit, the number of tokens that will be locked back into escrow this month remains uncertain.
While Ripple’s intention is to extend the timeframe for unlocking the remaining tokens, the monthly escrow mechanism has historically led to significant price declines, particularly during periods of lower interest in XRP. In June, for example, a major sell-off occurred when whales dumped approximately 120 million XRP following an escrow unlocking event by Ripple.
Read Also: Ripple Unlocks 1 Billion XRP from Escrow in Routine Procedure As XRP Price Remains Stable
The recent unlocking of 1 billion XRP coins by Ripple has the potential to impact the token’s price and supply dynamics. The increased availability of tokens often leads to price declines as supply outpaces demand. While Ripple aims to enhance liquidity through periodic token releases, this strategy also creates selling pressure.
As the market awaits the next bull run and the future of Ripple unfolds, uncertainty prevails over XRP’s price. Investors should exercise caution and carefully consider the inherent risks associated with any investment decisions.
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