XRP Price Stalls After Ripple's $3.28B Escrow Unlock
Ripple's $3.28 Billion Escrow Unlock Damps XRP Rally
XRP's price ascent faced headwinds recently after Ripple executed a significant token unlock from its escrow reserves. The move triggered concerns within the community, resulting in increased market volatility.
XRP price was on the verge of a breakout following a sustained period of gains, but the momentum was disrupted by market uncertainty fueled by a substantial unlock of tokens. Ripple executives have attempted to clarify the situation; however, their statements have so far failed to fully reassure investors amid ongoing weekend volatility.
Unlocking 1 Billion XRP: Details
On Saturday, concerns spread within the XRP community following Ripple's decision to release 1 billion XRP tokens from escrow.
Whale Alert reported that Ripple unlocked 500 million, 100 million, and 400 million XRP tokens in three separate transactions, with a combined value of $3.28 billion.
These tokens were originally held in escrow as part of a 2017 initiative aimed at stabilizing the XRP market supply. The transactions sparked speculation of an impending sell-off.
"They want you to buy XRP while they sell it," wrote CFA Rajat Soni on X.
This sentiment, among others, suggested that Ripple might be manipulating its escrow release schedule. Notably, XRP had recently experienced a bullish trend, supported by positive developments in the ongoing legal battle between Ripple and the US SEC.
In response to the concerns, Ripple CTO David Schwartz clarified that the escrow release was a routine activity.
"They always release on the first day of the month. You may not necessarily see any on ledger activity just because the escrow has released, though. The ledger doesn’t do anything by itself; it always waits for someone to submit a transaction to trigger it," Schwartz explained.
Some community members have pointed out that Ripple's escrow accounts have randomly released contracts in the past two months.
The Ripple escrow system has long been a subject of debate, given the significant amount of XRP held within the contractual arrangement. According to XRPscan data, approximately 35.6 billion XRP remain in escrow following the recent release.
"…can Ripple manipulate the escrowed contract release date at any given point? So in theory, they could release the whole 36 billion XRP in the next 5 minutes?" one user questioned.
Ripple's escrow contract releases up to 1 billion XRP each month, a mechanism intended to prevent market saturation. This is meant to stabilize the XRP price; however, individual transactions, particularly those recorded on the XRP Ledger, can still influence market dynamics.
XRP Price Analysis: Bullish vs. Bearish Scenarios
Analysts suggest that XRP may be poised for a breakout on higher timeframes. However, the price appears to be consolidating on the one-day timeframe, with bullish traders positioning themselves.
Based on bullish volume profiles, buyers are looking to engage with XRP near the demand zone between $2.9611 and $2.7354. This indicates a potential continuation of the downtrend by another 5% to 7% before a possible reversal.
The Relative Strength Index (RSI) is also declining, signaling weakening momentum. Should the immediate support at $3.1061 fail, XRP could decline further until it reaches the demand zone.
Conversely, increased buying pressure could lead to a resumption of the uptrend, potentially overpowering bearish sentiment. However, the supply zone between $3.4000 and $3.5493 is currently exerting overhead pressure. Bulls seeking to take long positions should consider waiting for a candlestick close above the midline of the supply zone at $3.4687.
A close above this level on the one-day timeframe could trigger further gains, potentially allowing XRP to reclaim its peak of $3.6607, representing a 7% increase from current levels.