Ripple is deviating from its usual escrow pattern by reserving 470 million XRP tokens for sale, the largest monthly offload in seven years. The move ushered in concerns over XRP’s market stability.
Ripple is causing worry with its latest move, reserving an unprecedented 470 million XRP for sale. The reserve marks the most significant monthly release since 2017.
Ripple Doubles its Reserve Volume
Ripple, the core developer of the XRP Ledger and largest XRP holder, unlocked 1 billion XRP tokens earlier this week. Ripple unlocks 1 billion tokens each month but reserves a portion for sale to fund operations, usually 200 million tokens. On November 1, Ripple deviated from its standard pattern by doubling its total reserve to 470 million, marking its largest monthly sell-off in seven years. The move is notable given Ripple’s ongoing legal battles, which have raised concerns among investors as the sell-off could put downward pressure on XRP’s price. The doubled reserve is even more worrisome as it comes just days before the US Presidential election, as political undercurrents could play havoc with XRP’s future price.
Ripple’s XRP Escrow
Ripple has operated a structured release mechanism to control XRP’s supply and prevent market oversaturation since 2017. The process, known as escrow, involves unlocking 1 billion XRP, re-locking a portion, and reserving a certain amount for selling activities. When Ripple initiated the practice, it locked 55 billion XRP (55% of the total supply) into a series of escrows set to be released over 55 months. These escrows are on the ledger itself, and the ledger mechanics, enforced by consensus, control the monthly release of the XRP.
Of the 1 billion XRP released each month, around 200 million is reserved for sale to fund its operations and the remainder is re-locked in long-term escrow. November’s reserve of 470 million XRP is notably larger than its usual reserve, suggests heightened financial needs, and may indicate a substantial liquidity event in the future.
Escrow Recaps
Ripple’s November reserve is notable compared to previous months. In June 2024, Ripple sold 400 million XRP, with an initial 200 million reserved and an additional 200 million transferred from Ripple’s idle account (35). The large-scale sell-off immediately negatively impacted XRP’s performance, with XRP dropping around 20% within a week. Ripple’s November sales are more substantial than June’s and could worsen adverse effects if the market perceives it as a lack of confidence in XRP’s future or the company giving into the pressures of the SEC’s ongoing lawsuits.
In September and July, sales reached 350 million and 300 million XRP, respectively, but followed its usual 200 million monthly reserves, supplemented by idle accounts throughout the month.
Ripple’s total XRP sales for 2024 have exceeded 2.5 billion XRP, with the highest sales in June, July and September. However, this month’s 470 million allocation stands out as the allocation comes directly from the reserve and is prepared all at once. These factors, coupled with the increased amount, could create a more considerable and immediate impact on the market. Should Ripple execute the sales aggressively, it may drag XRP’s price lower if demand is not large enough to absorb the additional supply.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.
