Pundit Unveils Relationship Between Ripple XRP Buybacks and XRP 50% Price Spikes

Mr. Huber, an on-chain sleuth in the XRP community, has revealed a striking correlation between the XRP buybacks by Ripple and the cryptocurrency’s price movements. 

It bears mentioning that XRP often records inexplicable price surges on occasion. In a recent post on X, Mr. Huber claims that Ripple’s buybacks are the main driver of these sudden and massive price surges, which are then followed by gradual declines.

According to the industry commentator, XRP experiences rapid and unexplained price spikes ranging from 30% to 100% every few months. He says that these spikes are almost always synchronized with Ripple’s buybacks of XRP on the open market.

Ripple has been purchasing XRP from the open market for business purposes, while they sell XRP to institutions for ODL (now Ripple Payments). For instance, in their Q4 2022 report, the firm confirmed that they purchased $2.7 billion worth of XRP in the fourth quarter of 2022.

However, their ODL-related sales, coming in at $2.9 billion, exceeded these purchases. Ripple stopped reporting on their XRP buybacks from Q2 2023, and instead, stuck with disclosures concerning their XRP holdings, including the assets in escrow wallets.

Mr. Huber explains that Ripple’s buybacks have a significant impact on XRP’s price, claiming that a net purchase of $100 million within one or two days could trigger a 50% price increase. 

He also estimates that a 20x price growth for XRP from its current level would require a net purchase of $6 billion. The industry pundit based this estimate on the volume of the XRP bull run in the 2017/2018 cycle.

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Ripple Needs to Hold Less XRP

Mr. Huber’s disclosure sparked a discussion within the community. Mark, a crypto researcher and investor, asked why Ripple was accumulating more XRP instead of just distributing its holdings. He stressed that he preferred to see Ripple own less XRP, not more.

Interestingly, David Schwartz, Ripple’s CTO, holds the same sentiment. Schwartz revealed last April that Ripple cannot do anything else with the XRP it holds other than sell it, confirming that it is better for the firm to hold less XRP.

Responding to Mark’s question, Mr. Huber emphasized the transparency in Ripple’s operations, which is why he was able to discover the correlation.

He argued that Ripple’s buybacks were beneficial for XRP holders. According to him, if Ripple needs XRP, it would be better for them to purchase on the open market for liquidity reasons.

That’s just a question of your knowledge. Ripple makes it transparent. That’s why we know. And you want Ripple to buy back XRP. You don’t want them to just sell it. Believe me. If XRP actually has a use for Ripple then you want them to buy on open markets for liquidity reasons. https://t.co/WLwFxfzo6y

— Mr. Huber???????????? (@Leerzeit) January 2, 2024

While Mr. Huber’s theory seems to match XRP’s price action, the estimates appear somewhat exaggerated, as the XRP chart does not show such drastic price changes. In addition, other factors also influence XRP’s price, such as market sentiment and regulatory developments.