On January 1, 2025, Ripple will release over 1 billion $XRP , equivalent to over $2 billion, from its escrow system on the XRP Ledger blockchain.
The release will occur in three stages: 200 million, 300 million and 500 million tokens, according to data from the XRPScan explorer.
This will increase the amount of XRP in circulation, currently at 57.2 billion. This unlocking represents 2.63% of the total 38 billion XRP still held in escrow by Ripple.
The tokens to be released were originally locked in 2021 and 2024, and are part of a gradual distribution system that began in 2017.
Why does Ripple release $XRP in escrows?
Unlike cryptocurrencies like Bitcoin and Ethereum, whose creation occurs continuously through mining, Ripple pre-mined the entire supply of 100 billion XRP at the beginning of its network.
To prevent market flooding, 55 billion XRP has been locked in automatic escrows, which release 1 billion tokens per month. These unlocks have three main purposes: to fund operations, invest in the Ripple ecosystem, and provide liquidity for payment solutions.
While not all unlocked XRP enters the market – some is frequently re-locked – this practice increases selling pressure in the short term.
XRP is currently trading above $2.17, down 4.6% on the daily. However, the large volume released could test the market’s ability to absorb the extra supply.
The moment is even more relevant because experts, such as those at VanEck, believe that the market is entering an “altcoin season”, a period in which alternative cryptocurrencies to Bitcoin gain prominence and value.
However, analysts differ on the start of this altseason, which historically occurs when Bitcoin reaches its peak of market dominance.
With the price of $BTC hovering around $98,000 and bullish expectations for 2025, many expect the first quarter of the year to be crucial for altcoins.
