XRP's Price Drop: Flow Analysis of a 1B Unlock and Market Response

The market's first major test of 2026 arrived precisely on schedule. On February 1, Ripple executed its monthly escrow release, unlocking roughly 1 billion XRP in a series of four transfers. The combined value of this supply injection was approximately $1.6 billion at the time of execution. This is a structured, predictable event, not an unexpected shock.

The timing was inauspicious. The unlock followed a weak close for XRP in January, when the token declined by more than 10%. Selling pressure extended into the new month, with prices slipping further. This sequence highlights the market's apparent inability to absorb even scheduled supply releases amid broader risk aversion.

The net impact is tempered by Ripple's typical relock pattern. Historically, the company relocks between 60% and 80% of the unlocked tokens. This month was no exception, with Ripple relocking 700 million XRP worth roughly $1.09 billion. The result is a net increase of only 300 million XRP in circulation, a fraction of the initial $1.6 billion flow. Yet, even this smaller net supply addition landed in a market already tracking lower.

Price Action and Volume: Confirming the Bearish Breakdown

XRP's price confirmed a bearish breakdown early in February. The token broke key support, extending a multi-month downtrend. Just two days into the month, it had already dropped by more than 6%, trading at $1.57. This follows a weak close for January, when the price fell to a low of $1.50, its lowest level since the October crash.

The lack of volume recovery signals a severe absence of buying interest. Despite the price decline, trading volume has not provided the 'recovery' needed to suggest accumulation. This pattern of selling pressure without a corresponding surge in volume indicates the market is not absorbing the supply injection, but rather capitulating.

The deep skepticism is quantified by the market cap to fully diluted valuation ratio. With XRP trading near $1.57, its current market value is a fraction of its theoretical maximum if all 100 billion XRP were in circulation. This wide gap shows the market assigns little value to the vast majority of tokens that remain locked or controlled by Ripple, reflecting profound doubts about future unlock dynamics and price realization.

Catalysts and Risks: What to Watch for a Reversal

The immediate technical signal to watch is a sustained break above the descending channel support on the daily chart. A close above that trendline would invalidate the current bearish breakdown and signal a potential reversal of the multi-month downtrend.

The monthly escrow unlock pattern itself is a key catalyst. Ripple has historically relocked between 60% and 80% of the released tokens, a behavior that repeated this month with a 700 million XRP relock. Monitoring whether this relock ratio holds or shifts is critical. A significant deviation could signal a change in Ripple's liquidity needs or market confidence, directly impacting net supply flow.

The broader market drawdown and lack of volume recovery remain the primary external risks. The sell-off has pushed Bitcoin and Ethereum to multi-month lows, dragging XRP down with it. Without a recovery in overall trading volume, any price move is likely to be weak and short-lived, prolonging the downside.