On Saturday, Ripple unlocked 1 billion XRP tokens worth $3.28 billion from escrow, triggering market uncertainty and interrupting the cryptocurrency's multi-day rally.
Impact of Token Unlock
The unlocking of 1 billion tokens immediately sparked backlash from the XRP community. Notable social media commentator CFA Rajat Soni criticized the timing of the move, stating, 'They want you to buy XRP while they sell it.' This sentiment reflects wider fears that Ripple may be manipulating market conditions. Notably, this unlock occurred as XRP had been experiencing upward momentum following positive developments in Ripple's legal battle with the SEC.
Understanding Ripple's Escrow System
Ripple established its escrow system in 2017 to stabilize XRP's market supply. The protocol allows for monthly releases of up to 1 billion tokens to prevent market flooding while maintaining price stability. Data from XRPscan shows that approximately 35.6 billion XRP remains locked in escrow following the August 9 release. However, community members have raised concerns about the unpredictability of these releases.
Technical Analysis and Price Forecast
Market analysts suggest that XRP is still positioned for potential breakout on longer timeframes, despite current volatility. Buying volume profiles indicate that buyers are prepared to engage at the demand zone between $2.9611 and $2.7354, implying that a decline of 5-7% might occur before a recovery attempt. The Relative Strength Index shows declining momentum. If immediate support at $3.1061 fails, the price could retreat to the demand zone where significant support exists. Conversely, sustained buying pressure could resume the uptrend, overcoming bearish sentiment.
Ripple's routine escrow unlock created notable market turbulence despite company assurances of the process's regularity. Technical indicators suggest XRP may need to retreat further before resuming its upward trajectory, with clear support and resistance levels defined for traders.
