Ripple Labs is scheduled to unlock 1 billion XRP tokens from its escrow accounts on June 1

This event is part of Ripple's ongoing monthly release cycle (which started in 2017), whose goal is to manage the distribution of XRP in a controlled manner.

Cryptocurrency behemoth Ripple Labs is set to unlock 1 billion XRP tokens from its escrow accounts on June 1, aiming for over $2.3 billion based on current market prices.

This event is part of Ripple’s ongoing monthly release cycle, which started in 2017 with the goal of managing the distribution of XRP in a controlled manner.

The company’s XRP escrow system was designed to provide predictability and transparency in XRP’s supply by releasing 1 billion XRP each month. Afterwards, Ripple typically re-locks a big portion of the tokens back into escrow shortly after the release, usually around 60% to 70% of the original amount. The remaining tokens are utilized for operational expenses, ecosystem investments, and liquidity provisioning.

There were some changes in recent times where Ripple adjusted its approach by pre-locking a portion of XRP before the scheduled monthly release. For instance, this month, Ripple pre-locked 700 million XRP prior to the release, a strategy also observed in the last two months. The main objective of this preemptive action is to lessen the potential market volatility by keeping a notable amount of tokens from immediate trading.

Looking at this from a historical perspective, these monthly unlocks have had minimal long-term impact on XRP’s price due to Ripple’s consistent re-locking practices, although there were times with increased volatility. Namely, in June last year, Ripple sold 400 million XRP during its regular escrow cycle, which ultimately led to big price swings of nearly 20%.

As such, June might once again be one of the more volatile periods for the cryptocurrency, especially when we consider that the deadline for the SEC’s decision concerning spot XRP ETFs is on June 17.

At the time of writing, XRP is trading at approximately $2.32, with a decrease in value of around 10% in the last 7 days. In the last 30 days, the cryptocurrency registered an increase of around 11%.

The upcoming unlock represents a substantial addition to the circulating supply, yet the market impact can go either way. It will likely be influenced by the SEC’s decision as well, whichever way it swings in June.