Ripple Labs has published its Q4 2018 markets report, and the data indicates that Ripple Labs has dumped a record $535.56 million worth of XRP onto the market in 2018. That’s as compared to $181.6 million worth of XRP in 2017. In total 1.6 billion XRP was released from escrow. Every month Ripple Labs releases one billion XRP from escrow and makes it available for sale, and the unsold XRP is returned to escrow. During 2018, the amount of XRP sold increased from 100 million XRP per month in Q1 and Q2 to 200 million XRP per month in Q4.
In the report, Ripple Labs compares the total sales figure to the $298.46 billion global trading volume of XRP, which makes the sales look miniscule. However, the buy support for XRP according to CoinMarketBook is $12.5 million, meaning the price of XRP would decline 10 percent if $12.5 million worth of XRP is sold at any given time. Therefore it is likely that the $535.56 million of XRP dumped throughout 2018 resulted in significant downward pressure on its price.
Further, Messari Research found that 99 percent of XRP volume comes from overseas exchanges, many of which have been accused of wash trading. Indeed, in its markets report, Ripple Labs indicates that a bulk of XRP sales is via programmatic trading, and it is possible that these programmatic sales may inflate trading volume via wash trading. There is no way to know for certain that Ripple Labs is engaging in wash trading, although there is a clear incentive to do so, considering that global trading volume is being used by Ripple Labs to justify its large XRP sales.
The 1.6 billion XRP dumped onto the market during 2018 represents an inflation rate of four percent, assuming that the total circulating XRP supply at the beginning of 2018 was 39.56 billion XRP. However, a recent study indicates that the published circulating supply of XRP is overestimated, and only 21.8 billion XRP is in circulation. If this is accurate, then the 1.6 billion XRP dumped by Ripple Labs in 2018 represents an inflation rate of 7.3 percent.
During 2018, the price of XRP relative to Bitcoin (BTC) declined from 16,500 satoshis to 9,500 satoshis (42.4 percent), and during January XRP has declined even further to 8,500 satoshis. The sustained decline of XRP relative to Bitcoin may be due to the constant dumping of XRP onto the open market by Ripple Labs.
Cryptocurrency traders and investors should be aware of the centralized nature of the XRP market before investing in XRP, since this data indicates that the XRP price will be suppressed long term by Ripple Labs.