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Once again Ripple is generating news as the company issued 1 billion XRP coins from its escrow accounts on September 1, 2024. The release, which cost more than $560 million, has made waves in the digital currency market.
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First 500 million XRP were released in three consecutive phases; then there were 200 million and finally 300 million. Each of the three transactions completed within minutes, indicating that Ripple had really good control over the token supply.
Market reaction to the unlock
The price of XRP went slightly lower immediately after the unlock, at $0.55, which is a drop of 2.26% from the day before. This shouldn’t really come as a surprise, considering how large-scale releases have proven time and time again to impact prices.
According to Whale Alert, today at 10:50 UTC+8, 1 billion The address: rDqGA…mKxEsF was marked as an official Ripple address by XRPSCAN and bithomp.…
— Wu Blockchain (@WuBlockchain) September 1, 2024
Ripple’s Chief Technology Officer, David Schwartz, has previously acknowledged mixed feelings when it comes to these monthly unlocks. While this may be an attempt to make the markets more transparent and predictable, in reality such publications serve to inject volatility into the markets.
Interestingly, the unlocked tokens will remain in the ‘Ripple 24’ wallet, meaning there are no immediate plans to distribute them further. That could mitigate a more severe price drop since these tokens are not yet on the market.
However, analysts warn that the increased liquidity of such tokens could lead to possible sell-offs and further unpredictability of the token’s price in the near future.
Historical context and predictions
Until now, Ripple has released 1 billion XRP every month, a tradition that started in May 2024, while more than 43 billion XRP remained in an escrow account until December 2027.
In fact, the organization believes its approach will see a gradual dilution of control and further decentralization of its network. Ripple’s willingness to sell has recently caught the attention of investors as such sales affect the price of XRP.
Analysts are still divided on what the future of XRP could be. A few believe there could be a spike similar to the exponential price increases we saw in 2020, while others expect a flat, if not stagnant, trajectory.
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Broader implications for the crypto market
Should XRP break the shackles of its current trading patterns, some estimates put its value as high as $4. This optimism is based on market demand and the overall resilience of the crypto market.
What Ripple is doing has effects that could spread far beyond just XRP in the market. More broadly, cautious optimism continues to define the crypto market, with many investors remaining wait-and-see until clearer signs of an altcoin season emerge.
Featured image from Nature, chart from TradingView
