While most cryptocurrencies are performing well, several tokens like Ripple (XRP) have not followed the broader market rally. XRP opened the day down about 2% before recovering roughly 1.96% at the time of this report.
Ripple has experienced notable volatility, which helps explain why its monthly and weekly gains appear muted compared with other coins that have doubled, tripled or even quadrupled in value.
This article examines several factors that have influenced Ripple’s price action.
Why has XRP’s price fallen?
Although XRP has recorded intermittent price increases recently, many of those gains have quickly evaporated. Today’s session began with a drop before the token moved back into positive territory, rising roughly 1% as of this writing.
So what is holding XRP back while many investors call this an altcoin season? The answer lies in a mix of market dynamics and specific developments tied to Ripple, notably a recent release of 1 billion XRP coins from escrow.
Release of 1 billion XRP from escrow
On the first day of the month, Ripple DLT executed its routine escrow release, unlocking 1 billion XRP and adding part of that amount to the circulating supply.
Ripple routinely releases XRP from escrow on the first day of each month to increase the supply available for circulation. In many past instances these monthly releases did not hurt market sentiment, but this month’s distribution coincided with a negative market reaction: XRP slid about 2% shortly after the release occurred.
WhaleStats, a tracker of large crypto holders, confirmed the escrow release was executed in two tranches of 500 million XRP each. WhaleStats and Ripple’s own disclosures indicate the withdrawals took place in the early hours and involved an estimated $811.39 million worth of XRP.
Following the announcement and subsequent market movement, Ripple’s market capitalization declined to approximately $39.3 billion, allowing Solana to overtake Ripple into the sixth position by market cap.