Ripple Lab’s $1B XRP Treasury: How It Could Affect XRP Price

XRP Treasury: Ripple Bets Big on $1 Billion Fund to Grow XRP Holdings

Can Ripple’s new XRP Treasury change the future of the token? The company’s latest move, a $1 billion plan to build a dedicated treasury has caught the crypto world’s attention. Some are excited, while others are cautious.

Ripple Labs said it will create the XRP Treasury through a SPAC (special-purpose acquisition company). The goal is to hold the crypto in one place and manage reserves better. The company wants more control and transparency in how the token is used in its ecosystem.

A Bold but Risky Plan

According to Bloomberg, Ripple will raise $1 billion through the SPAC. Part of the funds will come from it’s own tokens, and the rest from outside investors. 

The accumulated fund will support the organisation in providing liquidity to partners, financing acquisitions, and backing tokenized finance projects. 

Some experts say that such a strategy might make the token's price stable by limiting its circulation. 

On the other hand, there are fears that the transfer of such large amounts to the fund will result in more selling pressure. 

The differing opinions have caused the investors to take a wait-and-see approach.

Ripple’s plan follows a similar effort by Singapore’s Trident Digital, which launched a $500 million digital asset treasury this year. 

Analysts warn that such models can face challenges. For example, Metaplanet’s enterprise value fell below its crypto holdings, showing the risks involved.

XRP Price 

• After this announcement, XRP price dropped 2.56% to $2.36 in 24 hours. 

• This is slightly worse than the broader crypto market, which fell 2.34%. 

• It also broke below a key support level of $2.33.

• Technical indicators place this altcoin below its 7-day and 30-day moving averages. 

• RSI (Relative Strength Index) is at about 32, on the verge of being oversold. 

Experts caution that if it fails to rebound above $2.80 in the short term, it may continue to dip further to $2.14 or even $1.80.

Source: CoinMarketCap

The near-future SEC ruling on XRP ETFs, due sometime between October 18–25, creates additional uncertainty. 

Market players are hesitant, fearing a "sell-the-news" phenomenon in case ETFs are approved hastily.

Why the XRP Treasury Move Matters

It will allow firm to have greater influence over how the token flows in the market. It also indicates faith in token's future. 

The organisation views this cryptocurrency as a payments tool, source of liquidity, and tokenized finance vehicle even after recent price declines.

It may incentivize banks and institutions to employ the cryptocurrency for cross-border transfers and corporate reserves.

This may bolster adoption and confidence in the token. Ripple's acquisition plan of GTreasury, a software firm that deals with treasury management, also aligns with the plan. 

It will assist Ripple to deal with tokenized deposits and stablecoins. 

What's Next

If Ripple gets this move right, it may cut down market supply and boost investor confidence. Transparency and approval from the regulators will be the keys.

For now, traders are watching closely. The short-term price may remain volatile. The next few weeks, especially around ETF decisions, the XRP news will show whether the treasury strengthens or pressures the token.
Disclaimer: This article is for information purposes only, kindly do your own research or consult a profession before investing in crypto markets.