Ripple continues to follow its policy of holding back most XRP tokens from its escrow account. This time, 90% of tokens were returned to the locked address.
Most of This Month’s Escrow Funds Are Returned
In the latest monthly escrow operation, Ripple, Inc. returned 90% of the entire amount of 1 billion XRP. Only 100,000 XRP remain at large, after the coins moved back into the escrow wallet in three large transactions.
The largest transaction was noted to return 500,000 XRP.
500,000,000 #XRP (114,771,339 USD) locked in escrow at Ripple
Tx: https://t.co/deG8Iba9RD
— Whale Alert (@whale_alert) March 2, 2020
The operations match a recent statement by Ripple about its intentions to hold onto most of the XRP locked in escrow. This has the effect of calming the market, and possibly establishing a higher XRP price.
XRP traded at $0.23, down 14% due to the dramatic correction last week. But in 2020, XRP has markedly higher volumes, constantly above $2 billion per day. XRP, at those prices, is still seen as a risky bet and a wild card for potential appreciation to much higher price levels.
The selling of XRP has been a contentious issue in setting the market price for the asset. The coins awarded to former Ripple CTO Jed McCaleb are also a potential factor that floods the market with coins. Earlier airdrops, as well as early adoption, also weigh down on the price.
Ripple Relies on XRP Sales for Profitability
Recent analysis also shows that Ripple, Inc. is dependent on selling XRP for its profitability. Since RippleNet is still in its early stages, the actual XRP assets are a significant source of cash flows.
Ripple’s CEO was recently cited by the Financial Times, essentially admitting that XRP was an important factor for the bottom line of the organization. XRP, which was generated a few years ago, was initially not a part of Ripple’s idea to offer an alternative interbank payment system.
Well XRP is one source. I don’t know how to answer that because if you took away our software revenues, that would make us less profitable. If you took away all our XRP, that makes us less profitable. So I don’t think about it as one thing
He clarified later,
We would not be profitable or cash flow positive [without selling XRP], I think I’ve said that. We have now.
Ripple keeps adding banks and partners, to boost the usage of its On-Demand Liquidity on RippleNet. But so far, actual XRP usage is limited and the asset depends mostly on open-market speculation.
What do you think about Ripple’s escrow operation in March? Share your thoughts in the comments section below!
Images via Shutterstock, Twitter @Whale_Alert
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