TL;DR
Ripple is set to unlock over $2 billion worth of XRP on January 1, adding 1.74% to the current circulating supply, as part of its strategy to fund operations and provide liquidity.
Historically, similar unlocks have had varying effects on the market, with Ripple’s aggressive selling strategy imposing challenges for XRP’s growth and requiring increased demand to sustain price levels.
The upcoming XRP unlock coincides with predictions of an impending altcoin season, potentially providing an opportunity for price growth if demand for XRP remains strong.
On January 1, 2025, Ripple is set to unlock over $2 billion worth of XRP from its escrow system on the XRP Ledger blockchain. This planned release will occur in three transactions of 200 million, 300 million, and 500 million XRP, adding 1.74% to the current circulating supply of 57.2 billion XRP. The January release represents 2.63% of the remaining 38 billion XRP tokens still locked in Ripple’s escrow accounts.
Purpose and Impact of the Unlock
The scheduled unlocks are part of Ripple’s strategy to fund its operations, invest in ecosystem development, and provide liquidity for its payment solutions. While the real amount of XRP that enters circulation each month is often lower than 1 billion due to the company re-locking a portion of tokens into new escrows, this release still creates significant selling pressure.
With XRP currently trading above the $2 mark, it remains to be seen whether the market will absorb the additional supply without a negative impact on the price.
Historical Context and Market Reactions
Historically, similar unlocks have had varying effects on the market. For instance, in November 2024, Ripple sold 470 million XRP from the 1 billion unlocked from escrows, marking its largest dump in seven years.
This aggressive selling strategy has imposed challenges for XRP’s growth, requiring a proportional increase in demand to sustain current price levels. As of now, Ripple has sold 3.246 billion XRP from its reserve accounts in 2024 alone, representing more than $6.5 billion in selling pressure year-to-date.
Altcoin Season and Future Prospects
The upcoming XRP unlock coincides with predictions of an impending altcoin season. VanEck experts have suggested that the altcoin season may already be in full force, with altcoins outperforming Bitcoin as traders seek higher returns in alternative assets.
This cyclical nature of capital flows in the cryptocurrency market, driven by investor psychology, often benefits nascent crypto sectors such as decentralized finance (DeFi), gaming, and non-fungible tokens (NFTs).
Crypto analyst Ash Crypto has predicted that the altcoin season will start in Q1 2025, drawing parallels between Bitcoin’s performance in 2020 and 2024. If demand for XRP remains strong, the upcoming unlock could provide an opportunity for price growth, despite the additional supply entering the market.
