Can XRP, with $1.4 billion worth of supply being released, maintain its $1 defense line?

▲ Ripple (XRP) ©

As the scheduled release of $1.4 billion worth of XRP (Ripple) from lockup approaches on May 1st, pessimism warning of a collapse below the $1 mark, coupled with severely bearish technical charts, is weighing down the market.

According to the cryptocurrency specialized media outlet Finbold on April 27th (local time), Ripple will release 1 billion XRP tokens into the market this Friday, in accordance with its monthly escrow program introduced in 2017 to enhance transparency and predict supply. Based on the current trading price of $1.41, this amounts to a massive volume of $1.41 billion.

The likelihood of such a massive supply bomb immediately leading to a price crash is low. Typically, Ripple has controlled the circulating supply by re-locking 60% to 80% of the released tokens into new escrow contracts. Indeed, in March and April, the amount released into the market for operational purposes was only around 200 million to 300 million units, having a minimal impact on price volatility.

The real crisis, as pointed out by experts, lies not in the routine escrow release event but in XRP's precarious technical indicators. Despite strengthened fundamentals during a long sideways market that has lasted over 12 weeks, the actual price movement has been stubbornly bearish. The upward support line, which has held on with difficulty for weeks, is now facing the risk of a downward breakout, and an analysis suggests that if this line breaks, a brutal correctional phase could open, dropping below $1.

From a technical perspective, XRP is currently trapped in the early stages of a macro Elliott Wave correction. With the second wave not yet complete, the primary defense line is set around $1.13. If even this support level breaks, the price could slide sharply into a liquidity zone between $0.90 and $0.73. Notably, $0.73 is the last critical lifeline, coinciding with the 0.702 Fibonacci retracement on a 3-day chart.

In conclusion, the criteria for deciding to sell ahead of the lockup release are not the event itself but individual investors' target holding period and risk tolerance. The media diagnosed that as XRP repeatedly fails to break through major resistance levels and the risk of falling below $1 increases, the current pre-collapse chart could be a strong sell signal for short-term traders to seriously consider reducing their holdings.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*