Will $1.3 Billion in Supply Flood the Market? Will the Release of 1 Billion Ripple Tokens Accelerate Price Decline?

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A massive supply bomb exceeding $1.3 billion is ready to flood the market. As blockchain payment company Ripple Labs has unlocked 1 billion XRP (Ripple) from its escrow account, market tension is escalating over concerns that additional selling pressure could be exerted on prices already experiencing a downturn.

According to crypto media outlet Finbold on May 1st (local time), an analysis of on-chain data from blockchain explorer XRPSCAN revealed that Ripple released 1 billion XRP, valued at approximately $1.37 billion, from its escrow account on that day. This release occurred over four transactions, with the largest single amount being 400 million tokens worth approximately $547 million. Additionally, 100 million, 300 million, and 200 million tokens were unsealed sequentially.

Following this action, Ripple's escrow account is understood to hold 33.35 billion XRP, valued at approximately $45.69 billion. The media outlet analyzed that, based on practices over the past several months, the company is likely to relock 700 million of the released tokens back into the escrow account. However, the remaining 300 million tokens, equivalent to approximately $411 million, carry the potential risk of flowing into cryptocurrency exchanges or over-the-counter (OTC) desks and being released as actual selling volume.

Ripple has regularly utilized the proceeds from the sale of these unlocked tokens to build its core payment solutions, such as cross-border remittances. This is a strategic funding method aimed at driving mainstream adoption of the XRP Ledger ecosystem. Indeed, its value as a payment network has been consistently proven, with the International Finance Bank recently highlighting XRP's crucial role in financial infrastructure through an internal presentation.

However, a large-scale token release puts significant pressure on immediate market price defense. Finbold pointed out that this 1 billion token unlock coincided with strong selling pressure from whales, large wallet holders. An analysis suggests that if the market supply of XRP, currently around 61.68 billion tokens, further increases and becomes diluted, it could further fuel short-term bearish sentiment among investors.

Reflecting investors' uneasy sentiment, the token price has been unable to escape its downward trend. Over the past week, the XRP price has fallen by more than 4%, currently struggling to maintain its level around $1.37. With persistent selling pressure and concerns about increased circulating supply, the token's total market capitalization has also shrunk below $85 billion.

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