The ripple price received a 13 percent bump after the fintech startup revealed that it had put its 55 billion XRP tokens into escrow.
The ripple price had spent the majority of the week in decline, falling from $0.254 on December 1 to $0.222 this morning. However, shortly before 1:00 UTC, the ripple price shot up as high as $0.272 before leveling off to a present value of $0.250 — a 12-hour gain of nearly 13 percent.
Ripple’s daily trading volume swelled to nearly $700 million, with nearly half of that concentrated on the South Korean exchanges of Bithumb, Coinone, and Korbit.
The apparent justification for the upswing is the announcement that Ripple — the fintech startup behind XRP — had officially placed 55 billion of its estimated 61.8 billion XRP into escrow. Each month, 1 billion tokens will be unlocked for Ripple’s use, and any unused tokens will be placed back into escrow.
This development eliminated the threat that Ripple could flood the market with XRP, effectively crashing the price. Though highly unlikely, this scenario was possible since Ripple holds almost twice as many XRP than are currently in circulation. Now, XRP investors know with certainty the rate at which new tokens will enter the market, enabling them to better establish a fair value price for the token.
“By securing the lion’s share of XRP in escrow, people can now mathematically verify the maximum supply that can enter the market. While Ripple has proved to be a responsible steward of XRP supply for almost five years – and has clearly demonstrated a tremendous track record of investing in and supporting the XRP ecosystem – this lockup eliminates any concern that Ripple could flood the market, which we’ve pointed out before is a scenario that would be bad for Ripple!,” the company wrote on its blog.
Ripple had announced its intention to escrow these tokens months ago, so the news had already been somewhat priced in. Nevertheless, the escrow’s execution provided the ripple price with another bump, enabling the fourth-largest cryptocurrency’s market cap to rise to $9.7 billion.
Last modified: May 20, 2020 9:17 PM UTC