Key Takeaways
- Ripple’s founder and former CTO Jed McCaleb has been dumping a significant number of his XRP tokens into the market.
- The move could have severe implications on the altcoin’s price given its lack of liquidity after several cryptocurrency exchanges suspended its trading activity.
- Indeed, XRP might take a 33% nosedive if it closes below $0.28.
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One of Ripple’s co-founders has resumed the sale of his XRP holdings, putting significant downward pressure on the troubled token.
Dumping Millions of Tokens
Ripple’s founder and former CTO Jed McCaleb holds more than 9 billion XRP, which he acquired as part of the compensation plan for his role as one of the project’s main contributors.
Following his departure from Ripple in 2013, McCaleb announced that he had started liquidating his coins.
“I have given away and donated some of my 9 billion XRP to charities such as MIRI, Literacy Bridge, Give Directly, Mission Bit, and others. [Now,] I plan to start selling all of my remaining XRP beginning in two weeks. Because I have immense respect for the community members and want to be transparent, I’m publicly announcing this before I start.”
Since then, Whale Alert has been able to identify over 100,000 transactions that appear to be McCaleb. The transaction tracking service provider found that the current CTO at Stellar sold over 1.20 billion XRP between 2014 and early 2020.
At an average price of $0.13, this amount of tokens is equivalent to $157 million.
McCaleb seems to have paused his XRP sales right after the U.S. Securities and Exchange Commission (SEC) filed a class action against Ripple. However, the “tacostand” wallet associated with him sent roughly 120 million XRP tokens, worth $36 million, to Bitstamp in the past four days.
The sudden spike in downward pressure could add fuel to the fear, uncertainty, and doubt surrounding this altcoin.
As some of the most prominent cryptocurrency exchanges in the industry have suspended XRP trading activity, the token’s liquidity is rapidly declining.
Now, it has a better chance to react fast to mounting sell orders.
XRP on Cusp of Lower Lows
A further increase in supply could see XRP break out in a downward direction from a symmetrical triangle where it has been contained over the past two weeks. The distance of the technical pattern’s widest range estimates a potential target of nearly 33%.
If XRP moves past the triangle’s lower trendline and closes below the $0.28 support level, it could generate panic among investors, sending the coin’s market value to $0.19 or lower.
It is worth noting that a 4-hour candlestick close above $0.31 may have the strength to invalidate the pessimistic outlook.
Under such circumstances, the symmetrical triangle will be considered a reversal pattern that leads to an upswing to $0.40 for XRP.
Disclosure: At the time of writing, this author owned Bitcoin and Ethereum.
