$110M Sell-Off Could Trigger Crash

• Ripple unlocked a billion XRP tokens, as it does every month, with 200 million of these seemingly heading for the exchanges to create $96 million in selling pressure.
• XRP has dipped 20% in the past week, while its transactions for the second quarter dipped 65%, and average cost per transaction surged 170%.

In its monthly custom, Ripple has unlocked a billion XRP tokens, at least a fifth of which seems headed for exchanges at a time when the token’s price has dipped 20% in the past week.

XRP trades at $0.4831, dipping 8.9% in the past day. The decline affected every other crypto in the market on a bloody Monday that saw over $400 billion wiped out. Overall, the market cap is down by 10.46% to $1.89 trillion, with analysts debating whether the bottom has been hit.

In the past day, XRP hit an intra-day low of $0.4345, its lowest price in a month. However, while the broader market’s big dip in the past day played a significant role, XRP has been dipping for the past five days from a high of $0.6538 on July 31.

Ripple will likely sell off a chunk of its XRP tokens in this shaky market, worrying analysts that this could further suppress the token’s price.

On August 1, the company unlocked a billion tokens, as it does every month, from three escrows, each contributing 500 million, 300 million and 200 million tokens, respectively. Of this, Ripple moved 200 million tokens to its treasury account, and it’s this chunk that is expected to be sold off in the open market. The rest was re-committed in new escrows that will only unlock in late 2027.

The 200 million tokens will fetch the company $96.5 million at the current prices. In theory, the market should effortlessly absorb this increased liquidity—after all, XRP recorded $4 billion in trading volume over the past day, a 250% increase from the past day.

However, history shows that the market is very sensitive to Ripple dumps and that the company tends to have an outsized effect on the market. Last month, for instance, the company dumped 400 million XRP tokens over two days; the token dipped in those two days. This was its biggest sale this year. As the chart below shows, Ripple sales have led to price declines this year more often than not.

The Ripple sale would also come at a time when the XRPL ecosystem has recorded a dip in most metrics. According to Ripple’s Q2 report, transactions were down 65%, while the average cost per transaction rose 168%. The number of new wallets dipped 45% year-on-year while volume on DEXes also dipped by over 40%.

This new headwind from Ripple could thus suppress a fragile market.

However, some analysts still believe that XRP could regain its momentum and hit new heights in the long term. With an XRPL stablecoin coming later this year and the anti-crypto Gary Gensler seemingly out of the job early next year, the token could rebound as adoption soars.

XRP Stable pic.twitter.com/9fzudyMcTF

— mickle (@xrpmickle) August 3, 2024

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