Will XRP Price React To Ripple’s 1B XRP Unlock On January 1?

by

As a seasoned crypto investor with a knack for deciphering market trends and a keen eye for spotting opportunities, I’ve seen my fair share of token unlock events that have left many investors scratching their heads. However, when it comes to Ripple‘s XRP, the story is different. Despite the monthly unlocks of billions worth of XRP tokens, the price remains relatively unaffected due to Ripple’s strategic approach to providing liquidity rather than selling or buying the tokens.

Every month, Ripple makes available a billion XRP to support its business activities. The upcoming New Year’s Day marks the beginning of the first XRP token unlock event for 2025, although this development has raised some concerns since the value of Ripple tokens is currently on an upward trend in the market charts. We’ll observe how the price of XRP adjusts in response to these massive amounts of XRP being released.

Will Ripple’s Token Unlock Affect XRP Price?

55 billion XRP tokens, accounting for almost 55% of the total XRP supply, have been secured in a trust by Ripple. On a monthly basis, one billion XRP are released from this trust, starting on the first day of each month. Despite the substantial quantity, these releases do not significantly impact the price of XRP tokens due to their intended purpose – providing liquidity for exchanges and partners, rather than for sale or purchase. Consequently, the unlocked XRP do not immediately enter the market, thereby preserving the current XRP price.

It’s evident that the December sell-offs, marking Ripple’s largest XRP liquidation, didn’t hinder the price from hovering around $1.8 and even spiking the following day due to several bullish factors such as the introduction of the RLUSD stablecoin. In January 2024, Ripple plans to release 1 billion XRP in three transactions: 200 million, 300 million, and 500 million XRP. This amounts to approximately 1.75% of the total circulating supply of XRP.

In two key escrow wallets, Ripple is set to manage the releases of 200 million XRP from a lock-up that took place in December 2020 and another 300 million XRP from a lock-up in January 2021. Moreover, the second wallet, belonging to Ripple, will oversee the release of 500 million tokens that were locked away in 2021.

Ripple releases these tokens to finance their operations, build their network, and ensure market fluidity. Notably, a portion of these released tokens is then re-locked, minimizing the effect of selling pressure on Ripple’s price. It’s intriguing that the releases of Ripple tokens bear similarities to Stablecoin minting, which typically has little impact on the market, or if it does, the impact is hardly noticeable.

What’s Coming Next, XRP Price to Hit $10?

In the face of growing selling activity, the price of XRP has started to decline, dropping by approximately 7% in a week. At present, it’s trading at $2.18, but with a decrease of 10% in daily trading volume ($4.72B), suggesting that investors are reducing their holdings. However, despite this, the token has seen a significant surge of 56% in just one month and an impressive 250% increase over the past year. This strong performance is evidence that it has emerged from years of price stagnation.

Interestingly, its 450% surge between November 3 and December 3 formed a bull flag setup, as the token consolidated right after that. With that, the recent CoinGape report revealed that any addition to the flagpole height could lead to the XRP hitting new ATH. However, Bitcoin price performance also plays an important role in this. If the price slips below $90k, it could introduce a bear market, impacting the Ripple token price negatively and pushing it down to $1.5 or lower.

Outcome of Future XRP Unlock on Ripple Token

Ripple aims to release approximately 55 billion XRP over a period of 55 months to finance its operations and development. This also provides liquidity to trading exchanges, ensuring smooth transactions of XRP tokens. Notably, these ‘token releases’ occur on the first day of each month. It’s worth mentioning that these releases typically don’t significantly affect the price of XRP, as the released tokens are not intended for trading. In fact, some analysts liken these XRP releases to printing Stablecoins but with greater stability. With this factor out of consideration, Ripple still aims to reach a target price of $10, influenced by the price movement of Bitcoin.

Read More

2024-12-26 14:20