Last year, Ripple, the tech company behind the XRP token reported a spike in the sale of XRP tokens during the second and third quarter of the year. Unfortunately, things changed during the fourth quarter as the company has just released a report that showed a 25% decline in XRP sales. The first logical explanation of this decline is that the bear market has caught up with XRP.
XRP Sales By Ripple Drops By 25%
According to the Q3 report from Ripple, only $129 million in XRP was sold by the company during the last three months of 2018. This shows that sales are down by 25% from $163 million in the third quarter. The strange thing is that even if the demand for XRP dropped, the trading volume increased significantly. The trading volume was about $600 million daily during the last quarter of the year but Ripple Labs can only account for 1% of that volume.
Ripple II conducted $40 million in sales. This sales were made directly to institutions. About 3 billion in XRP was released from escrow for operations but only 600 million out of that figure was used during the last few months of 2018. The rest was sent to back to escrow. It’s possible that Ripple is waiting for the market to improve before using the reserves. It’s also possible that it didn’t have any reason to spend the all the money.
During the fourth quarter of the year, about 30 exchanges added the XRP token. This summed up the number of exchanges that provide support for XRP to 100. During this period, Ripple’s xRapid hit the market and was fully adopted by three firms: Cuallix, MercuryFX, and Catalyst Corporate Federal Credit Union. The xRapid protocol uses the XRP token as a settlement layer for cross-border payments between large financial institutions. It is one of the most promising technologies by Ripple Labs.
During the fourth quarter of the year, enforcement actions against shaddy initial coin offerings increased. Many scam projects were weeded out pushing the market towards legitimate projects. During this same period, Ripple Labs received funding from mainstream venture capitalists. Most of its revenue was generated from token sales and this is similar to funding projects with ICOs. Ripple Labs still relies on institutional token sales to fund its operations.
XRP (XRP) Price Analysis
Within a six month period, XRP is down by 40%. It is still a long way from its all-time high. Irrespective of the downtrend, XRP was able to overtake ETH as the second cryptocurrency per market capitalization. While the overall trend looks promising, XRP is still facing liquidity issues like many other cryptocurrencies in the market. This isn’t a problem being faced by XRP alone, almost every cryptocurrency apart from BTC is facing liquidity issues. The bear market will need to come to an end soon if there is to be any hope for the industry.
At the time of writing, XRP was trading at $0.313517. This shows that it is down by 1.43% against the USD and down by 0.21% against BTC. The trading volume over a 24 hour period is $330,856,051 and the market capitalization is $12,905,460,612. The entire market is currently on a downtrend. The next few trading sessions will determine if the trend will change.
Do you think the drop in XRP token sales will have an effect on the market during the first quarter of 2019?