Ripple’s sales of XRP increased over 90% in the first quarter of 2021 from the quarter before, driven by demand from its “On-Demand Liquidity” (ODL) customers, according to Ripple’s 1Q 2020 XRP Markets Report released this week.
Alongside massive growth in the cryptocurrency total market value, from around US$800 billion to more than US$2 trillion in the first three months of the year, XRP sales by Ripple, net of purchases, increased from US$76 million to over US$150 million, according to the report. XRP is the native cryptocurrency of the XRP Ledger created by Ripple, a San Francisco-based payments company.
Ripple’s total sales amounted to 0.07% of global XRP volume, compared to 0.05% the quarter before, according to CryptoCompare. XRP’s volatility in the first quarter of 2021 was 9%, a decrease from last quarter’s 9.5%, but was higher than that of Bitcoin (3.4%) and Ether (4.4%).
According to the report, the number of “whale” wallets — wallets with balances of at least 10 million XRP, increased from 308 to 319. The number of wallets holding between one million and 10 million XRP also increased from 1,125 to 1,196. The total number of on-ledger wallet addresses increased 15% from 2.35 million to 2.7 million.
SEC v. Ripple lawsuit
The price of XRP, which was the third-largest cryptocurrency in the world by market value, initially plummeted by more than 60% after the U.S. Securities and Exchange Commission filed a lawsuit against Ripple in December 2020, alleging that its sale of XRP was an unregistered securities offering worth over US$1.38 billion. The SEC also named Ripple’s executive chairman Chris Larsen and CEO Brad Garlinghouse as co-defendants for allegedly aiding and abetting Ripple’s violations.
The lawsuit is currently in its discovery phase, with each side trying to obtain more information from the other, and limit what information must be shared. In a ruling this week, U.S. Magistrate Judge Sarah Netburn ordered the SEC to produce internal documents that discuss Bitcoin, Ether and XRP to Ripple.
Despite major U.S. cryptocurrency exchanges such as Coinbase and Kraken delisting XRP over the lawsuit, XRP is still traded outside the U.S. and remains popular in Asia, particularly in Japan. XRP is currently trading around US$1.60, and is ranked as the fifth-largest cryptocurrency, with a market value of US$72 million after Bitcoin, Ether, Binance Coin and Dogecoin as of publishing time.
See related article: SEC seeks to knock out Ripple defense, says no duty to warn over XRP
Growing momentum in Ripple’s ODL and partnerships
Notwithstanding its legal troubles, Ripple has been pushing ahead to expand its payments business.
According to Ripple, the sales were to improve XRP liquidity to support ODL, which enables cross-border payments without the need for pre-funding. Through the ODL service, Ripple’s blockchain-based RippleNet network of financial institutions around the world use XRP as a bridge between currencies allowing for cross-border payments and settlements.
In March, Ripple announced its plans to acquire a 40% stake in Asian cross-border payments specialist Tranglo as part of its expansion of ODL in the Asia Pacific region, starting in Southeast Asia.
Beyond ODL, Ripple also saw XRP integrations with cryptocurrency exchanges such as Singapore-based Bitrue, Australia’s Independent Reserve, and KuCoin adding XRP trading pairs. XRP was also integrated into decentralized finance (DeFi) with Wanchain and Huobi ECO Chain building cross-chain bridges to the XRP Ledger.
CoinShares,Europe’s largest digital asset investment firm, launched an XRP exchange-traded product on the Zurich-based SIX Swiss Exchange, Switzerland’s principal stock exchange and Europe’s third largest. There is currently US$65 million of XRP under management, according to CoinShare’s digital asset fund flows report this week.
Ripple reported that three billion XRP were released from escrow — one billion per month — in the first quarter of 2021. A total of 2.7 billion XRP were returned and subsequently put into new escrow contracts throughout the quarter, the report stated.
Since January 2018, one billion XRP has been released each month. In 41 months, Ripple has released 41 billion XRP, of which 33.7 billion was returned into escrow, and 822 million on average has been re-escrowed every month, according to XRParcade.
“There was a slight uptick of conversation around Ripple “flooding the market” last quarter, as many continue to misunderstand the mechanics of the escrow process which are simply transfers between Ripple treasury and escrow management accounts,” the company said in the report. “Those transfers do not equate to Ripple distributing XRP.”
See related article: XRP prices steady after court hearing, Ripple releases $1.6 billion XR