Ripple's founder and former CTO Jed McCaleb is releasing a substantial portion of its XRP tokens. Given the lack of liquidity after several cryptocurrency exchanges suspended trading activity, the move could have serious implications for the altcoin's price. As a matter of fact, XRP could drop by 33% if it closes below $ 0.28.
One of Ripple's co-founders continued the sale of XRP shares, putting significant downside pressure on the token, which was in trouble recently.
Millions of Token Sales
Ripple's founder and former CTO Jed McCaleb has more than 9 billion XRP purchased as part of the compensation plan for his role as one of the main contributors to the project. After leaving Ripple in 2013, McCaleb announced that he started liquidating cryptocurrencies.
“I gave and donated some of my 9 billion XRP to charities like MIRI, Literacy Bridge, Give Directly, Mission Bit and others. Now I plan to start selling all my remaining XRP in two weeks. I make this public before I start because I have great respect for community members and want to be transparent.
Since then, Whale Alert has identified more than 100,000 transactions that look like McCaleb. The transaction monitoring service provider found that Stellar 's CTO sold 1.20 billion XRP between 2014 and early 2020. With an average price of $ 0.13, this token amount corresponds to $ 157 million.
McCaleb seemed to halt XRP sales right after the U.S. Securities and Exchange Commission (SEC) filed a lawsuit against Ripple. However, its associated "tacostand" wallet has sent about 120 million XRP worth $ 36 million to Bitstamp in the past four days.
The sudden rise in downward pressure can add fuel to the fear, uncertainty, and doubt surrounding this altcoin. The liquidity of the token is also rapidly declining as some of the leading cryptocurrency exchanges in the industry have suspended XRP trading activity. Now there is a chance to react faster to increased sell orders.
The surge in supply could see XRP breaking down from a symmetrical triangle it has found in the past two weeks. The distance of the widest range of the technical pattern estimates a potential target of about 33%. If XRP crosses the triangle's lower trend line and closes below the $ 0.28 support level, it could create panic among investors and send the cryptocurrency's market value to $ 0.19 or less.
Additionally, it's worth noting that a 4-hour candlestick near $ 0.31 may have the power to override the pessimistic outlook, according to analysts.
Under these circumstances, the symmetrical triangle can be considered a reversal pattern for XRP leading to a rise to $ 0.40.