- Ripple's CTO, David Schwartz, recently clarified that the company's sales of XRP are intended for liquidity management, not to dump on investors.
- Ripple maintains its XRP reserves in two categories: escrow accounts and readily accessible portions. Tokens from escrow accounts are released every 42 months.
- Despite the CTO's explanation, Ripple transferred another 50 million XRP to an unknown wallet just a day later.
- In the charts, XRP is attempting to reclaim an upward trendline. A potential 40% surge could occur if XRP breaks above the $0.55 mark.
Ripple has faced criticism in recent years from various stakeholders, including investors, traders, and even law enforcement agencies. The primary concern revolves around Ripple's consistent sale of XRP tokens. Recently, Ripple's Chief Technology Officer, David Schwartz, defended these sales on Twitter, characterizing them as routine transactions rather than harmful dumps.
Why does Ripple regularly sell XRP despite investor concerns? How frequently does this occur, and is it truly necessary for the company?
Ripple's Selling Strategy
Ripple holds a substantial amount of XRP in its reserves, which it periodically releases and sells. These reserves are divided into two main categories: XRP that is immediately accessible and XRP that is held in escrow.
In its Q1 2024 report, Ripple explained the importance of these classifications. The report indicates that XRP in escrow accounts is released every 42 months, during which time the company cannot access these tokens. Moreover, most of the tokens released from escrow each month are not immediately sold but are instead re-locked and released in subsequent months.
Managing Liquidity
A Twitter user named Steve recently highlighted the issue by asking why Ripple is the largest seller of XRP. Schwartz responded, explaining that holding vast amounts of XRP indefinitely is impractical. Selling these holdings is necessary to manage the liquidity of the tokens. Schwartz emphasized that Ripple's actions are simply selling, not dumping tokens into the market.
Continued Sales Activity
Despite Schwartz's explanation, Whale Alert recently reported a transfer of another 50 million XRP tokens from Ripple Labs to an unknown wallet. This transaction, valued at approximately $25.7 million, follows another large-scale movement just last week involving over 100 million XRP sent to an external wallet.
XRP's Market Performance
On April 8, XRP broke below an ascending trendline, indicating a potential setback. However, bullish investors have been working to push the cryptocurrency back above this trendline. Currently trading around $0.54, XRP is close to surpassing the psychological resistance level of $0.55. A break above this level could lead to a further rally, potentially reaching the $0.75 zone or higher.
Disclaimer: Voice of Crypto aims to provide accurate and timely information but is not responsible for any missing facts or inaccuracies. Cryptocurrencies are highly volatile assets, so please conduct thorough research and make your own financial decisions.
