XRP, one of the leading altcoins in the cryptocurrency market, has faced significant volatility throughout August 2024. The digital asset’s price has been on a rollercoaster, dropping to a low of $0.43 before briefly recovering to a high of $0.64. However, this recovery was short-lived, as XRP’s gains quickly evaporated, leaving investors concerned about its future trajectory. With the recent unlocking of a large batch of XRP tokens by Ripple, the market is now questioning whether XRP could fall back to its recent low of $0.43.
Ripple’s 1 Billion XRP Token Unlock
Ripple, the company behind XRP, recently completed a major token unlock, releasing 1 billion XRP tokens into the market. According to a well-known whale transaction tracker on X (formerly Twitter), Ripple conducted three consecutive unlocks totaling 1 billion XRP, valued at approximately $559.9 million. The transactions were split into three batches: one for 500 million XRP, and two others for 300 million and 200 million XRP each.
A specific transaction noted by the whale tracker highlighted, “500,000,000 #XRP (280,008,999 USD) unlocked from escrow at an unknown wallet.” This latest unlock has reignited fears among investors, who worry about the potential for further price declines. Historically, such scheduled token unlocks have exerted downward pressure on XRP’s price. For instance, in June 2024, Ripple offloaded 200 million tokens, resulting in a 9.25% drop in XRP’s value to $0.475. Similarly, during August’s unlocks, XRP fell from $0.65 to $0.56.
Since January 2024, Ripple has released over 2.02 billion XRP tokens from its treasury, with a total market value of $1.15 billion. During this period, XRP has experienced price declines in four out of eight months following these unlocks. While the altcoin saw gains in February and July, the overall trend suggests a negative impact from these periodic releases.
Market Indicators Point to a Bearish Outlook
According to an analysis by AMBCrypto, XRP has been on a sustained downward trend over the past week. Several key market indicators support this bearish sentiment. The Chaikin Money Flow (CMF) indicator, which measures the buying and selling pressure, recorded a reading of -0.02 for XRP. This negative reading indicates selling pressure, suggesting that investors may be closing their positions due to a bearish outlook.
Furthermore, data from CryptoQuant highlighted significant exchange inflows dominated by large transactions, commonly referred to as “whale” movements. Such high inflows into exchanges often suggest that major investors are preparing to sell, which could lead to additional downward pressure on XRP’s price.
Another critical metric, Open Interest (OI), which reflects the total number of outstanding derivative contracts, has declined over the past week. OI dropped from $469 million to $413 million, indicating that investors are closing their positions rather than opening new ones—a clear sign of negative market sentiment.
Finally, data from Coinglass shows a high level of long position liquidations in the past week, with $494,000 in long positions liquidated compared to $10,980 in short positions. This disparity suggests that investors betting on a price increase are being forced to exit their positions, further underscoring the bearish sentiment surrounding XRP.
Could XRP Fall Back to $0.43?
Given the recent volatility and the ongoing bearish market sentiment, there is growing speculation that XRP could retest its local support level of $0.43. Historical data shows that XRP’s price often suffers following large-scale token unlocks by Ripple, and the current market indicators do not paint a favorable picture for a quick recovery.
As XRP continues to navigate a challenging market environment, investors are keeping a close eye on key support and resistance levels. Should the bearish trends persist, XRP may indeed find itself testing the $0.43 mark once again. For now, the market remains cautious, with many waiting to see how XRP will react in the coming days and weeks.