XRP Sold to Institutions Reaches All-Time High in 3Q2018
Oct 29, 2018
- In 2012, Ripple Labs launched a real-time gross settlement system platform that uses a payment protocol and Ripple tokens (XRP) to allow for the direct and instant transfer of money between two parties. Since initially launching in 2012, Ripple Labs has unveiled other platforms that leverage new payment protocols, including xCurrent and xRapid.
- Ripple Labs initially created 100 billion XRP tokens to circulate in the market. Upon XRP’s creation, developers placed about 55 billion XRP tokens in a cryptographically-secured escrow account that allows Ripple Labs to sell up to 1 billion XRP each month. Although Ripple Labs has never sold close to its 1 billion XRP per month threshold, the company’s control over the constant supply of XRP tokens raises concerns over insider trading, price manipulation, and centralization in XRP.
- Starting in 4Q2016, Ripple Labs began releasing a quarterly XRP markets report to comment on the health of global XRP markets, provide updates on the current state of cryptocurrency markets, and disclose quarterly XRP token sales.
- Ripple Labs sold the largest amount of XRP in its history during 1Q2018, where USD$167.7 million worth of XRP were introduced to the market from Ripple Labs’ escrow account. In its 1Q2018 XRP Markets Report, developers note that USD$16.6 million worth of XRP were sold directly to institutions -- only 9.90% of XRP sold in 1Q2018 were sold directly to institutions, the smallest percentage of XRP sold directly to institutions out of total XRP sales in a quarter since Ripple Labs began disclosing the data.
- During 1Q2018, XRP’s price reached an all-time high, meaning that Ripple Labs sold the largest amount of XRP in its history while XRP was trading at its highest level. Was Ripple Labs profit taking, or were developers simply trying to meet investor demand? Regardless, this observation raises concerns that Ripple Labs oversold XRP and triggered XRP’s initial drop-off in 1Q2018 and/or exacerbated the decline.
- Although XRP has been trading at low levels relative to the rest of 2018, Ripple Labs sold nearly the same amount of XRP in 3Q2018 as it did in 1Q2018, disclosing a total of USD$163.3 million worth of XRP sold. In this quarter, however, Ripple Labs sold USD$98.1 million of XRP directly to institutions – In 3Q2018, 60.0% of all XRP sold were sold directly to institutions, the second highest percentage of XRP sold to institutions in a quarter since Ripple Labs began disclosing the data.
- USD$98.1 million of XRP sold directly to institutions out of total XRP sold is the largest amount of XRP Ripple Labs has ever sold to institutions in a quarter, representing a 400.3% increase in the metric since the same time last year and a 481.3% increase since the previous quarter. This large amount of growth speaks to the level of institutional adoption that Ripple received in 3Q2018 despite cryptocurrencies, including XRP, observing a bear market.