In a recent Twitter exchange, former Director of Developer Relations at Ripple Matt Hamilton refuted the claim that the cross-border payments firm’s XRP holdings have a significant impact on the price of the token.
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Hamilton pointed out that Ripple is indeed the largest holder of XRP, possessing approximately 48 billion tokens. However, he highlighted that the majority of these holdings are kept in escrow contracts. These contracts release a portion of the XRP monthly, with Ripple only selling a small fraction and reinvesting the remainder into new escrow contracts.
As a result, Hamilton argued that Ripple’s influence on the market is relatively limited considering the global daily sales volume of XRP, which stands at around 4 billion tokens. In other words, the vast majority of XRP trading volume is not related to Ripple’s sales.
As for influencing price, the totally daily sales volume globally of XRP is about 4B XRP, so Ripple’s holdings are pretty small in comparison. The price of XRP mostly follows the test of the market and mostly follows BTC.
— Matt Hamilton (@HammerToe) July 16, 2023
Read Also: John Deaton Explains Why Locking Ripple’s XRP Escrow Accounts Forever Will Never Happen
Market Forces and Bitcoin (BTC) Drive Price
The developer then shed light on the underlying dynamics that really drive the price of XRP. He emphasized that market forces and the performance of Bitcoin (BTC) largely dictate XRP’s price movements.
In particular, Hamilton noted that XRP tends to follow the price of BTC, with both tokens rising and falling together. This is likely due to the fact that many investors view XRP as a “gateway” to the wider cryptocurrency market.
Community Can Burn XRP
Furthermore, Hamilton clarified that neither XRP nor XRPL is under Ripple’s control. To emphasize this point, he suggested that if the community deemed it necessary, all of Ripple’s holdings in XRP could be burned. This would effectively remove the company from the XRP ecosystem and give the community complete control over the token.
In response to concerns about Ripple’s significant ownership of the token, Hamilton reassured that this should not be seen as a worrying factor for the future. He explained that since Ripple operates just one validator, the community holds the power to vote for an amendment that would effectively “burn” the company’s holdings if they acted against the community’s interests.
Read Also: Ex-SEC Director: It’s Reasonable for Judge Torres to Lock Ripple’s XRP Escrow Permanently
In conclusion, Hamilton’s insights provide a valuable perspective on the relationship between Ripple’s holdings and the price of XRP. According to the developer, while the company is the largest holder of the token, its influence on the market is relatively limited. The real drivers of XRP’s price are market forces and the performance of BTC. Additionally, the community has the power to burn Ripple’s holdings if they act against the community’s interests.
Additional Thoughts
- Hamilton’s comments are likely to be welcomed by XRP holders who are concerned about the company’s influence on the price of the token.
- The fact that the community has the power to burn Ripple’s holdings is a significant safeguard against the company abusing its position as the largest holder of XRP.
- It will be interesting to see how the price of XRP responds to Hamilton’s comments in the coming weeks and months.
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