The XRP token had a great start to the week following a 2.82 percent surge in price after Ripple, the company that is using the cryptocurrency in its solutions, released 500 million tokens from an escrow account on Feb. 1, at least according to data provided by resource monitoring website Whale Alert.
In the last 24 hours, XRP price has spiked from $0.2460 to its current price of $0.2522, CoinMarketCap data shows. XRP’s gains extended across the board to other altcoins particularly those in the top ten list. The altcoins recorded mild gains ranging from 0.02 percent (in the case of the stablecoin Tether) to a high of 0.5 percent for Ethereum. Litecoin and Cardano are down 1.11 percent and 1.92 percent respectively.
XRP has fared well against the dollar since the beginning of the year, enjoying a year-to-date (YTD) performance of more than 26 percent gains, according to CoinMarketCap data.
XRP Price Spikes Despite the Release of 500 Million Tokens from Escrow
Ripple committed to locking 55 billion XRP tokens in smart contracts – or rather cryptographically-secured escrows – to control the supply of the tokens. The lockup was completed in December 2017.
The move is intended to incentivize market makers although Ripple remains in control of the tokens, something which investors and crypto enthusiasts are not exactly happy about. Ripple has defended its position, saying that it does not influence the price of XRP but rather acts as a steward of the token supply.
“While Ripple has proved to be a responsible steward of the 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 have pointed out before is a scenario that would be bad for Ripple.”
Ripple’s controversial relationship with XRP was on show in December when the company unlocked 1 billion XRP tokens valued at $192 million at the time.
Following the release, Ripple CEO Brad Garlinghouse reiterated that company executives do not influence the XRP supply. He added that the company will take the necessary steps to ensure that other entities do not acquire too much XRP to influence its price.
Garlinghouse hinted that there is a possibility of an initial public offering (IPO) in the future but experts have warned against the move, claiming that it could ‘kill the speculative nature of the token.’
The chaos in the XRP lock-up and periodic release squarely rests on the shoulders of both the company and the XRP community, which petitioned Ripple to lock-up the 55 billion XRP tokens. While the lockup soothed investors’ worries, the periodic release of the tokens has had the opposite effect, leaving the cryptocurrency in bearish sentiment.
Despite Ripple scoring good partnerships for its payment products such as RippleNet, XRP had a terrible run in 2019, losing nearly half of its value. Investors will take comfort in the hope that the partnerships will bear fruits down the road.