HomeNewsRipple Puts a Lid on Liquidity: Re-locks 800 Million XRP, Fueling Price...

Ripple Puts a Lid on Liquidity: Re-locks 800 Million XRP, Fueling Price Speculation

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  • Ripple re-locks 800 million XRP ($400 million) into escrow, leaving only 200 million XRP ($100 million) in liquid form.
  • The action potentially influences XRP’s market dynamics, as these newly liquid tokens represent about 0.37% of the total circulating supply.

Liquidity Management: A Calculated Move by Ripple

At the start of this month, 1 billion XRP tokens were released from Ripple‘s meticulously designed escrow system. This mechanism, which has been active since 2017, allows for a regulated injection of new XRP tokens into the market. What raised eyebrows, however, is Ripple’s decision to re-lock a staggering 800 million XRP into two separate escrow accounts, constituting 80% of the recently unlocked amount. For those unfamiliar with the term, “escrow” in this context serves as a secure holding pen for assets, controlled by a third party until certain conditions are met.

The mechanics involved two Ripple known accounts, referred to as Ripple 22 and Ripple 23. These accounts executed four distinct transactions. Specifically, 200 million XRP were transferred from Ripple 22 to Ripple 1, which now remains in liquid form. The rest was strategically locked in escrow programs set to expire by early 2027.

Market Ramifications: Near-term Volatility and Long-term Inflation

Such an orchestrated movement of assets naturally invites speculation. For context, the 200 million liquid XRP tokens could be injected into the market at any time at Ripple’s discretion. This newly freed liquidity forms approximately 0.37% of XRP’s current circulating supply of nearly 53 billion tokens. If Ripple were to maintain this ratio month-over-month, it would result in an annual inflation rate of roughly 4.4% for XRP.

Current market trends already show the influence of this escrow activity. XRP is trading at around $0.50 as of the latest reports, registering a 1.7% loss since the 1 billion tokens were unlocked on September 1. Notably, if XRP were to reach its all-time high market capitalization again, each token would be valued at nearly $2.48, which is 27% less than its peak price in 2018.

While these numbers capture immediate market reactions, they also present a larger picture of how Ripple’s liquidity management strategies could impact the market in the longer run. Future movements of Ripple‘s escrow releases and re-locks will likely continue to shape not only XRP’s price but also investor sentiments and strategies.

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Ralf Klein is a computer engineer specializing in database technology, and as such, he was immediately fascinated by the possibilities of blockchain when he first heard about it, especially since this distributed, tamper-proof technology can be the foundation for much more than just cryptocurrencies. At ETHNews, he translates the articles of his English-speaking colleagues for the German readers. Business Email: info@ethnews.com Phone: +49 160 92211628