XRP is struggling at a higher level than any other cryptocurrency among the top 10 by market capitalization, and the bearish sentiment does not appear to be over yet. Ripple could unlock a huge amount of tokens from escrow, further threatening the price.
Ripple unlocks 500 million XRP.
In the early hours of Friday, on-chain whale tracking platform Whale Alert posted two transactions carrying notable numbers of XRP tokens. The first transaction unlocked 200 million tokens from the escrow wallet, worth $122.63 million at the time of transfer.
The second transaction took place a few minutes later when a total of 300 million XRP tokens were released from escrow. This second token tranche, larger than the first, was worth $183.89 million at the time, bringing the total number of tokens unlocked to 500 million. Both deals were worth a combined $300 million.
These unlocks have raised concerns in the Ripple community for several reasons. One of the reasons is that Ripple does not unlock it in the middle of the month. Rather, it performs scheduled unlocks at the beginning of each month. Therefore, these transactions caught the attention of the cryptocurrency community.
Another cause for concern is the fact that Ripple may sell these XRP tokens. This puts more tokens in circulation and puts more selling pressure on already struggling digital assets. However, Ripple has not shown any indication of what these unlocks are, as there have been no transfer transactions since then, only unlock transactions.
Can unlocking cause a price crash?
XRP unlocks are not new to the Ripple community, as scheduled unlocks occur monthly. These unlocks represent 1 billion XRP tokens unlocked from escrow as scheduled. However, in most cases, the majority of unlocked tokens will be transferred back to escrow.
Typically, these unlocks do not have a negative impact on altcoin prices, but unlocks are expected at this time. No unlocks were planned this time, leading to speculation as to why Ripple was unlocking XRP tokens outside of the unlock schedule.
So far, the XRP price doesn’t seem to be reacting at all to the unlocking. It showed a small loss of 0.91% in the past day and continues to trend around $0.61. However, the altcoin is still up 4.74% last week, showing the positive gains seen earlier in the week.
Token price at $0.6095 | Source: XRPUSDT on Tradingview.com
Featured image from Linqto, chart from Tradingview.com
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