At a time when the overall cryptocurrency market is undergoing sluggishness, any sell-off from a key person could play havoc in the specific digital coin’s price. That is what is happening in respect of Ripple’s XRP though it continued to enjoy the status of the third top virtual currency by virtue of its market cap.
Ripple’s Co-Founder Jed McCaleb holds a significant amount of the digital coin. Though he left the company a couple years back and a co-founder of its rival Stellar, he continued to divest his holding in the digital currency in the last couple of weeks, the Wall Street Journal reported. Following this, there is additional pressure on the virtual asset on the selloff. During the current year alone, XRP plunged approximately 74 percent.
There is no doubt that a sell-off coming from a co-founder is viewed as a negative catalyst by investors just like a publicly listed firm’s CEO started to dump the company’s shares in the market. His selloff highlighted the difficulties of startups during the initial phase. In an email, the co-founder indicated that he was not divesting beyond what was agreed upon with Ripple.
McCaleb has left Ripple in 2013 and joined hands with Stellar in the following year. It was only in 2012 that Ripple was established with a focus on technology for cross-border money transfer. Apart from the approximately 60 billion tokens of XRP, Ripple raised another $93 billion through venture capital companies such as Andreessen Horowitz, RRE Ventures and Founders Fund. Ripple continued to hold the majority of the digital coins.
In 2014, the co-founder struck a deal with Ripple. Accordingly, McCaleb sale of the XRP digital coin is restricted to a daily cap. However, in 2016, this was revised to reflect the percentage of the average daily volume of the virtual asset to ensure there was an orderly market. When the deal was struck, he and his kids were holding about 5.3 billion tokens. This included two billion donor-advised funds. As much as 7.3 percent of the tokens were held by him and the fund in 2016. He was selling not more than 0.75 percent cap and is now in the third year of selling the tokens.