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Ripple's $1 billion SPAC purchase has the intention of extending its holdings of XRP via a new digital asset treasury, extending its market base.
XRP prices are still in decline, more than 20% lower in a week, with poor investor sentiment.
Technical indicators indicate that bearish momentum continues, but that a recovery above $2.70 would pave the way toward $3.
Ripple Labs is in the news again, this time for a bold $1 billion scheme to purchase back its own XRP tokens. The effort, apparently being done through a special purpose acquisition vehicle (SPAC), comes at a volatile time for the digital currency. Even Ripple's aggressive display of faith has not been enough, with XRP's price refusing to recover, indicating the market is still worried about the token's short-term path.
According to Bloomberg reports, Ripple is seeking to raise up to $1 billion to set up a new digital asset treasury (DAT) to store XRP bought under the program and some of Ripple's current reserves. The buyback would add as much as an estimated 427 million XRP to Ripple's own holdings, further constricting the company's grip on the token's liquidity and circulation.
Today, Ripple directly holds in excess of 4.5 billion XRP and controls a further 37 billion XRP held in escrow, released in monthly installments. Parts of this escrow are sold to ensure market liquidity, while the rest is re-locked. The new DAT might act as a strategic buffer, enabling Ripple to stabilize the price of its token during times of increased volatility.
However, despite the optimism surrounding the buyback, XRP continues to trade under pressure. At the time of writing, the token sits at $2.23, down over 5.5% in the last 24 hours and nearly 20% for the week, struggling to recover from repeated rejections near the $3 mark.
Also Read: What’s Next for Bitcoin and XRP: Moon or Doom?
The buyback move follows Ripple's $1 billion GTreasury buyout, a top corporate treasury management platform. The buyout places Ripple in line to grow beyond its image as a provider of cross-border payment solutions and fortify its presence in digital finance infrastructure.
By adding GTreasury's capabilities, Ripple seeks to assist international companies in efficiently handling digital assets, stablecoins, and tokenized deposits, an initiative consistent with its overall plan to become an outright financial technology giant. The timing of these announcements indicates Ripple's optimism in both XRP's long-term position in international liquidity and its own developing ecosystem.
However, Ripple's increasing control over XRP's circulating supply might raise controversy. The criticism is that excessive centralization would drive away crypto purists who like decentralized token distribution. The supporters, however, see Ripple's assertive treasury approach as a balancing force amidst the market's unabating volatility.
Technically, XRP's chart continues to be under pressure. The token broke a significant multi-month support point at $2.50, falling below the lower Bollinger Band, a sign that selling momentum is prevailing.
The Relative Strength Index (RSI) is now standing at around 30, just below oversold levels, which might signal a possible short-term recovery if purchasing volume increases. The MACD is still in a bearish position, while the Balance of Power (BoP) indicator points towards sellers, reflecting weak market confidence.
Upsupport is immediate at $2.20. If this level does not hold, analysts threaten further decline to $2 or even $1.80. On the other hand, if bears were to regain strength and force the price above $2.70, the 20-day moving average, XRP would make another attempt to retest $3, a crucial psychological and technical resistance.
Ripple’s buyback and GTreasury acquisition underscore the company’s long-term vision of cementing its role in blockchain-based finance. However, market sentiment remains mixed. The buyback has yet to spark a noticeable price rally, suggesting that traders remain focused on macroeconomic factors, crypto market liquidity, and regulatory uncertainty surrounding XRP’s classification.
In the short term, XRP's destiny will rest on whether Ripple's treasury plan can regain investor confidence or if technical weakness continues to keep the token down. If Ripple proves sustainable demand and fulfills its corporate infrastructure plans, XRP may see renewed traction. Until then, investors expect more volatility as the altcoin struggles to remain above fundamental support points.
Also Read: Bitcoin's $126K Surge vs XRP's Legal Hurdles: Which Crypto Will Dominate?
Ripple's $1 billion buyback is a risk bet on its home token, evidencing high internal conviction despite XRP's difficulty to move forward. Whether this action signals the beginning of a long-term recovery or another fleeting rebound will be determined by market sentiment, investor confidence, and Ripple's ability to deliver on its growing financial infrastructure vision.
1. What is Ripple's $1 billion XRP buyback plan?
Ripple Labs is seeking to raise $1 billion through a SPAC for buying back XRP and holding it in a new digital asset treasury (DAT). The objective is to fuel liquidity, shore up reserves, and possibly stabilize the price of XRP during market volatility.
2. Why has the price of XRP not gone up since the buyback announcement?
Despite the buyback news, investor sentiment remains weak due to broader crypto market corrections and technical resistance near $3. Traders appear cautious, waiting for confirmed buying momentum and regulatory clarity before re-entering XRP positions.
3. How much XRP does Ripple already hold?
Ripple now holds more than 4.5 billion XRP directly and has another 37 billion tokens under escrow. The latter is released every month, with some being sold for liquidity while the rest are re-locked in order to retain supply control.
4. What does Ripple's acquisition of GTreasury signify for its future?
Ripple's $1 billion acquisition of GTreasury extends its reach in financial technology. The acquisition allows corporate customers to hold, transfer, and settle digital assets, stablecoins, and tokenized deposits, aligning with Ripple's overall shift toward financial infrastructure leadership.
5. What are XRP's main support and resistance levels now?
XRP has support at hand around $2.20. Should this fail, it may drop to $2 or $1.80. On the other hand, a bounce above $2.70, its 20-day moving average may relaunch buying sentiment and propel prices towards $3.
