With Ripple, investors often ask how the stock of XRP is actually broken down. In fact, it matters and we provide answers.
Despite all the prophecies of doom, Ripple (XRP) holds its own in the top 10 most important cryptocurrencies with a market capitalization of just over $50 billion. Quite a few investors are hoping that Ripple will be able to conclude a court case in the USA with the Securities and Exchange Commission (SEC) in the coming months and that XRP will then take off again. Those who have been interested in Ripple and XRP for a while also know: the handling of the 100 billion XRP originally generated by Ripple always causes discussions. We clarify:
- Data from CoinMarketCap shows that a good 46.6 billion XRP are in circulation (circulating supply).
- This coincides with the figures from Ripple itself, which can be found here. According to this, another 47.3 billion XRP are in escrow and a good 6 billion XRP are held directly by Ripple.
- The escrow account was established in December 2017 and is intended to fund Ripple to help XRP develop.
- It is stipulated that Ripple may sell up to 1 billion XRP per month from the escrow account. The cap is intended to eliminate any noticeable impact on XRP’s price curve.
- Nonetheless, in 2019 there was even a petition demanding: Ripple should stop its sales of XRP.
- In fact, Ripple has significantly reduced its XRP sales and furthermore, even 1 billion XRP sold by Ripple as a monthly cap would be negligible given XRP’s daily trading volumes of more than 5 billion XRP.
- The second repeated criticism of XRP’s pricing is the millions Ripple co-founder Jed McCaleb has brought to market over the years, most recently at a record pace. McCaleb had been promised nearly 10 billion XRP when he left Ripple, to be allocated in tranches.
- Here, contractual clauses take effect that regulate how many XRP McCaleb is allowed to sell each week and are supposed to exclude any influence on the price of XRP. Experts agree: these rules work.
- Moreover, Jed McCaleb is almost at the end of his XRP sales, as already became clear in the summer of 2021. The latest data on McCaleb’s holdings show only a good 700 million XRP left in his account.
XRP and Ripple – are they parting ways?
It is to be stated: The usual speculations, Ripple by the trust account or McCaleb by its enormous compensation could affect the price of XRP directly, do not work.
But what should happen to the more than 50 billion XRP that are not on the market and continue to be controlled by Ripple? According to all available information, it is definitely out of the question that these XRP holdings could be massively dumped on the market.
Rather, there is the idea that Ripple could destroy these huge volumes of XRP. For the idea of an IPO of Ripple was never abandoned and recently even reaffirmed by major investors. The argument then for finally taking the XRP remaining with Ripple off the market is: Ripple itself has fiat reserves and an IPO would bring fresh capital. Destroying the XRP in question would generate confidence and also solve legal problems.
Conclusion: optimism allowed with XRP?
Other factors are likely to have far more influence on the future of XRP than reserves:
1. If Ripple ends up as the loser in the lawsuit against the SEC, XRP’s reputation would be ruined and it would presumably be the end for the US business with XRP for good.
2. XRP still lacks a convincing use case. There has been no word on the idea of using Project Spark Flare to open the doors of DeFi for XRP. Several launch dates have not been met.
3. Ripple’s original concept of establishing XRP as a bridge currency for international money transfers never really took off. Whether a publicly traded Ripple would continue to pursue this concept is questionable.
All in all, the outlook for XRP therefore remains critical. Even destroying Ripple’s XRP reserves does not solve the real problems, as charming as the proposal sounds. What is important and correct, however, is that the rumor mill about XRP reserves produces a lot of nonsense. Distribution and possible sale plans are largely transparently regulated and do not harm XRP. Other altcoins also have large reserves that should be responsibly brought to market over the years. The linchpin for possible sustainable price increases for XRP remains convincing use cases.
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