Here’s why I believe XRP’s Price is being Temporarily Suppressed by the Owners.
For the last 3 years, XRP has been on a long down-trend, and while many assume the project is a ‘scam’, I disagree. My theory for the downtrend is that the owners are suppressing the price to ensure Co-Founder Jed McCaleb’s selling doesn’t have a major impact on future growth.
Jed McCaleb is an American programmer and entrepreneur. He is a co-founder and the CTO of Stellar. Prior to co-founding Stellar, McCaleb founded and served as the CTO of the company Ripple until 2013.
On his departure from Ripple, McCaleb announced his intention to sell all of his associated holdings, around 7 billion XRP. This triggered a 40 per cent drop in the crypto’s price and brought Ripple to the negotiating table.
The seven-year agreement resulted in limiting his monthly and annual sales. Ripple brought a lawsuit against McCaleb in 2016 accusing him of violating the arrangement. Consequently his daily sales cap was set at 1.5 per cent of XRP’s daily volume.
How Much He is Selling?
According to sources that tracked the activity of McCaleb, the former executive sold 1.8 million - 2.7 million XRP a day, over $400,000–$600,000 a day.
Looking at the quarter-wise numbers, McCaleb sold over $26 million worth of XRP in Q1 of 2020, the largest amount in the last five quarters. The highest ever amount of XRP sold by him was in Q4 of 2018, worth over $36 million.
For comparison, Ripple sold a total of only $1.75 million worth of XRP in Q1 of 2020, as compared to $13.08 million in Q4 of 2019.
McCaleb’s rampant offloading of the token he helped to create has long provoked upset between him and his former company, as well as interest from the wider crypto community.
Following the lawsuit, Ripple’s CTO David Schwartz joked: “Thanks to Ripple’s refusal, Jed’s XRP will probably be worth more than $1bn. He will probably be the only person to become a self-made billionaire despite his best efforts.”
Regardless of such boardroom conflagrations, McCaleb remains an important figure in the creation and evolution of the cryptocurrency world.
He became well known first as the creator of the Mt. Gox Bitcoin exchange, which once handled 70 per cent of all BTC transactions. This turned to notoriety after 850,000 BTC were stolen and the exchange declared bankruptcy.
Responding to the question of his XRP offloading, McCaleb stated: “The market has known for years that I have been selling my XRP at a slow, steady rate. My investment decisions are not based on any desire to negatively impact other companies in this industry.”
How Long will the suppression last?
It’s unclear exactly how long Jed will sell his coins, although considering the large amount of XRP he holds, he could continue this action for many years to come.
I believe once the size of his wallet is significantly smaller, Ripple will finally begin its process in acquiring new investors. As of now, any price movement upwards will be subjected to Jed selling his XRP, which would in turn, bring the price back down.
This is the reason why XRP has been dropping for over three years, and failed to bounce compared to other coins. Even though it’s one of the top coins in terms of volume, and market cap.
Is it a Good Investment
XRP is a controversial coin, because many claim it’s centralized, and only aimed at funding the owners.
The community stands strong, but as of recently, we’ve seen a decline in the amount of people supporting them. The true fans are focused on the numerous achievements from the team, whereas many traders are upset the asset hasn’t given them any good returns.
My personal stance is, I am a fan of it. I wouldn’t be writing this article if I didn’t see future growth in this asset. I first got involved in XRP several years ago, when the price was below 1 cent. It’s gone up thousands of % since, and I’m not focused on a few years of red.
Reminder: The Dow Jones has been around for over 124 years. At its start, the index had low volume, and growth was ugly. Now the index is valued at roughly $8.33 trillion. Patience is important.
No one knows exactly how long this downtrend will last, and analysis is fairly useless because of the nature of this situation. An ex-owner selling millions has a big impact on the price, which is something investors shouldn’t ignore.
He’s legally only allowed to sell at 1.5 percent of XRP’s daily volume, which might seem minimal. But imagine we went on a bull run. The volume would easily go to number 1, giving him the ability to sell huge amounts.
The future for XRP investors will be prosperous but that future doesn’t involve Jed. Once he’s no longer in possession of billions of XRP, the company and coin will flourish. Thats when I will accumulate large amounts.