Will XRP Price Crash to $0?

XRP's price has plunged 24.6% in a day, sparking fears of a total collapse.

Prasanna Peshkar

Prasanna Peshkar

XRP Price
Categories: CryptoXRP

XRP has been one of the most controversial and volatile cryptocurrencies in the market. Over the past few months, it has experienced both significant rallies and sharp declines, leaving investors uncertain about its future trajectory. The latest XRP price drop of 24.6% in a single day has reignited fears of a potential collapse, raising the question: could XRP truly crash to zero?

A major factor in this latest downturn is Ripple’s monthly token unlock, which saw 400 million XRP worth $1.136 billion released from escrow. Historically, these unlocks have introduced volatility into the market, with traders reacting swiftly to the increased supply. This article delves into the reasons behind XRP’s sharp decline, the impact of Ripple’s supply management, and whether the token is at risk of crashing to zero.

Why Did XRP Price Drop So Suddenly?

The recent 24.6% decline in XRP’s price has shaken the market, with investors questioning whether the cryptocurrency is heading toward a catastrophic crash. One of the primary reasons for this decline is Ripple’s routine monthly token release from escrow, which saw at least 400 million XRP unlocked, worth nearly $1.136 billion. This development, initially reported by Whale Alert, quickly triggered a negative reaction from the market, leading to massive selling pressure.

Historically, large unlocks of XRP have sparked volatility, but the severity of this drop has raised concerns about XRP’s short-term price stability. With XRP currently trading near $2.31, the question remains: is this just a correction, or is there potential for a further free fall?

Does All the Unlocked XRP Enter the Market?

It is crucial to understand that not all the unlocked XRP immediately enters circulation. Reports suggest that Ripple typically sells only 20-25% of the unlocked tokens, with the remaining portion locked back into escrow. This means that out of the 400 million XRP released, only about 80-100 million XRP may have been sold in the open market.

While this practice helps manage supply and mitigate a liquidity shock, the immediate reaction of investors suggests that even the partial release of these tokens led to a heightened sense of panic. Given that the cryptocurrency market is sentiment-driven, large token releases can amplify bearish momentum, as traders anticipate further sell-offs.

What Happens to the Remaining XRP?

Ripple follows a structured approach where it locks back the remaining XRP into escrow. This practice extends the release schedule into future months, theoretically limiting the amount of XRP dumped into the market at any given time. Ripple has repeatedly stated that this controlled release is aimed at maintaining price stability while ensuring that liquidity is available for partnerships and institutional demand.

However, despite these assurances, the market often reacts with uncertainty. The sudden XRP price drop indicates that traders still perceive large unlocks as bearish catalysts, irrespective of Ripple’s strategy.

Is Technical Analysis Indicating a Further Decline?

XRP Price Prediction
XRP/USD Daily Chart- TradingView

The XRP daily chart suggests a severe breakdown in price action. XRP had previously formed a local top above $3.00, followed by a rejection and significant sell-off. The chart now reveals a strong downward candle, confirming a bearish engulfing pattern, which historically signals further downside momentum.

Additionally, the Relative Strength Index (RSI) has dropped to 31.82, hovering just above the oversold threshold of 30. This suggests that while the asset is nearing oversold conditions, there could still be room for additional declines if selling pressure persists.

Key levels to watch include $2.00, which serves as a psychological support zone. A breach below this level could push XRP toward its next major support at $1.50. On the extreme bearish side, a failure to hold these levels could expose long-term support near $0.50, but a complete collapse to zero remains highly unlikely.

Why Does Ripple Conduct Monthly Unlocks?

Ripple's controlled token release strategy is designed to manage liquidity, fund operations, and promote network growth. By gradually selling only a portion of the unlocked tokens, Ripple aims to avoid extreme market shocks while ensuring that there is enough XRP supply for institutional use cases.

The problem, however, is the market perception of these unlocks. Every time Ripple releases a significant number of tokens, retail traders fear an oversupply situation, leading to sharp sell-offs. Despite Ripple's efforts to re-lock most of the tokens, the recurring nature of these events keeps XRP in a cycle of volatility.

XRP Price Prediction: Could XRP Really Crash to $0?

While XRP’s price is experiencing a steep decline, a total collapse to $0 is highly improbable. Several factors prevent such a scenario:

  • Institutional and Retail Demand – Despite the volatility, XRP remains one of the most actively traded cryptocurrencies, with institutional partners utilizing it for cross-border payments.
  • Ripple’s Supply Management – Ripple strategically limits the circulating supply through its escrow system, preventing sudden market saturation.
  • Regulatory Developments – While Ripple has faced legal challenges, it continues to expand its partnerships globally, reinforcing the long-term viability of XRP.
  • Historical Price Recoveries – In past market crashes, XRP has rebounded from significant declines, demonstrating resilience.

XRP Price Prediction: What’s Next for XRP?

XRP’s recent price drop is undoubtedly concerning, but the probability of a complete crash to $0 remains low. However, short-term volatility is expected to persist, especially as traders react to Ripple’s token unlock schedule.

Key levels to watch include $2.00 as immediate support, followed by $1.50 in the event of further downside. If XRP holds above these levels, a rebound could follow as market sentiment stabilizes. On the other hand, if panic selling continues, deeper corrections toward $0.50 could become a possibility.

Prasanna Peshkar
Article By

Prasanna Peshkar

Prasanna Peshkar is a seasoned writer and analyst specializing in cryptocurrency and blockchain technology. With a focus on delivering insightful commentary and analysis, Prasanna serves as a writer and analyst at CryptoTicker, assisting readers in navigating the complexities of the cryptocurrency market.

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