October 17, 2023

Ripple's Release of 75 Million Unlocked XRP Sparks Speculation

On October 16, Ripple initiated a transaction involving 75 million unlocked XRP from the 200 million tokens retained following October's escrow event.

Ripple's regular monthly inflation release of XRP has raised eyebrows, as it is a practice often associated with the company's strategic maneuvering in the cryptocurrency market, notably during volatile events such as pump-and-dump scenarios involving bitcoin.

Simultaneously, Ripple Labs moved 75 million XRP on the same day, which prompted some unsubstantiated rumours in the crypto sphere about the SEC's supposed approval of BlackRock's Bitcoin spot ETF. This sudden speculation briefly boosted BTC's price from $27,700 to $29,900 within minutes, before eventually retracting to $28,000. This ripple effect also had repercussions on other cryptocurrencies, including XRP.

It's worth noting that just days earlier, on October 10, Ripple had already initiated a similar transaction, releasing 60 million unlocked XRP. The recent movement of tokens followed a comparable trajectory, with these tokens traversing six different accounts before being distributed in small increments to four different exchanges, strongly suggesting they were primarily sold.

After the significant release of 1 billion unlocked XRP on October 1, Ripple took steps to lock up 800 million in new escrows, retaining 200 million tokens in the "Ripple (1)" account. Subsequently, 60 million tokens were spent, leaving 140 million unlocked XRP behind.

Data collected, referencing the XRP Scan, sheds light on the potential impact of XRP's inflation on the purchasing power of its holders, both in the short and long term. This information was extracted from the token's public ledger on October 17.

In the context of this transaction, 75 million of the remaining 140 million XRP were transferred from the "Ripple (1)" account to an unknown address labeled "rJqiM...La8nE" on October 16. Approximately five hours later, 70 million of these tokens were redirected to "rP4X2...sKxv3".

Notably, from the initial 75 million XRP (held by "rJqiM...La8nE"), 1.05 million XRP was also sent to "rKL6i...S5Xwa", with an immediate transfer to a Bitstamp account, likely intended for the spot market.

Continuing the trail, "rP4X2...sKxv3" forwarded only 26 million unlocked XRP to "rhWt2...E32hk", from the initially received 70 million tokens. Subsequently, 32.205 million XRP was promptly sent to "rJgpQ...7hCvf", and a total of 63.205 million was similarly forwarded to "r4wf7...h4Rzn". These accounts evidently liquidated a portion of their previous holdings.

Furthermore, the last address in this sequence distributed the entire amount across four known centralized exchange wallets and an unknown address labeled "rsdkG...apapb". This pattern closely mirrored the events of the previous month and strongly suggests a common entity behind the distribution of monthly unlocked XRP, given the consistent use of the same accounts.

In addition, the long-term ramifications of the token unlock and ongoing monthly inflation could potentially impact XRP's price if it ever approaches its all-time high market capitalization, potentially causing a nearly 30% reduction in value.

Ripple Labs, the company behind the cryptocurrency XRP, has faced criticism and scrutiny over various aspects of its operations. Key concerns include the strong centralization of XRP, the initial distribution of XRP, and Ripple's focus on its payment network, RippleNet. Some critics question the transparency of Ripple Labs and have accused the company of misleading marketing practices and self-enrichment schemes.

Ripple does not rely on a proof-of-work or proof-of-stake consensus mechanism like many other blockchains. Instead, it uses a consensus protocol that is controlled by a limited number of validators. Critics argue that this lack of mining and decentralization makes it essentially not a blockchain network but a centralized payment network.

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