Ripple, the second most dominant digital currency in the cryptomarket, does not add value monthly anymore. Over the past month, the digital asset has managed to stay within the levels of 0.5 USD, enduring only small losses while Bitcoin and other dominant digital currencies recorded 10-20% price drop.
Being a liquidity platform that offers high-profile banking and financial institutions the option of performing international payments at lower fee rates, an increased supply of XRP coins is essential for the blockchain platform to run.
Like EOS, which introduced a number of brow-raising policies on its native protocol to forbid financiers to hold EOS currency for a prolonged period without utilizing it, XRP also must keep a specific amount of its coins circulating to ensure the immutable performance of transactions for financial institutions.
Last year, the chief executive of Ripple Labs, Brad Garlinghouse, pointed out that XRP coins are stored in an escrow account and are subject for distribution to the public by the entity called Ripple Distribution. Over the past seven days, approximately 16 million dollars’ worth of XRP coins were transferred from the Ripple Distribution wallet to an anonymous wallet, accounting for another XRP injection into the cryptomarket.
In the event that the supply of the currency is enlarged unnaturally and the financiers’ demand does not change, then the price of the asset suffers from a negative effect in public markets. Within the past day, XRP value dropped to the level of 0.43 USD, registering a daily 10% drop against the USD. There is a possibility for the unpredicted XRP supply growth to be the culprit, affecting the short-term price trend for the currency.