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February 1, 2026, marks another scheduled release of 1 billion XRP from Ripple’s escrow accounts, continuing a long-established monthly process. This event coincides with the most significant set of technical upgrades to the XRP Ledger in recent years. The network finds itself at a pivotal juncture, shaped by post-litigation regulatory clarity and a substantial expansion of its decentralized finance (DeFi) capabilities.
The legal confrontation with the U.S. Securities and Exchange Commission (SEC) reached its conclusion in August 2025 when both parties withdrew their appeals. The $125 million penalty imposed by Judge Analisa Torres remained final—a figure substantially lower than the regulator’s initial $2 billion demand.
However, legislative efforts to cement XRP’s status face new challenges. The proposed CLARITY Act, which would explicitly classify XRP as a non-security, has stalled. Coinbase CEO Brian Armstrong withdrew his support on January 15, 2026, citing concerns over provisions that would ban tokenized equities, restrict DeFi, and limit interest payments on stablecoins. With over 130 proposed amendments now on the table, a vote in the Banking Committee has been postponed.
In a parallel development, Ripple secured a conditional approval from the Office of the Comptroller of the Currency (OCC) for a bank charter in December 2025—a first for a cryptocurrency-focused company. The planned Ripple National Trust Bank is intended to manage reserves for the RLUSD stablecoin, which surpassed a $1 billion market capitalization within its first year. An application for a Federal Reserve master account, which would grant direct access to FedWire and FedNow payment systems, is currently pending.
A major protocol upgrade, version 3.1.0, was released by the XRP Ledger Foundation on January 28, 2026. This update introduces three core enhancements designed to bolster the network’s utility:
Following the release, Ripple developer Mayukha Vadari encouraged developers on January 30 to test these changes ahead of activation on the Devnet. Several key amendments are now on the verge of going live.
The Token Escrow Amendment is scheduled for activation on February 12, 2026, and will extend escrow functionality to include IOUs and Multi-Purpose Tokens. Meanwhile, the Permissioned Domains Amendment has already achieved the required majority support, with activation expected within four days.
The release of 1 billion XRP follows a procedure established by Ripple in 2017, when the company locked 55 billion tokens in escrow contracts. These contracts are programmed to release 1 billion XRP on the first day of each month. Historical data indicates that only a portion of these tokens typically enters the circulating supply. Ripple routinely returns between 700 and 800 million XRP to new escrow contracts each month, with an estimated 200 to 300 million tokens actually reaching the market.
Given the current circulating supply of approximately 60.85 billion XRP, the release of 300 million new tokens would represent a supply increase of roughly 0.5%. The market impact often hinges on the proportion Ripple chooses to retain or sell for operational purposes.
XRP maintains its position as the fifth-largest cryptocurrency by market capitalization, standing at around $60 billion. The spot ETFs launched in late 2025 have demonstrated strong investor interest, attracting inflows exceeding $1.3 billion within their first 50 trading days.
The activation of the Token Escrow Amendment on February 12 is anticipated to accelerate DeFi adoption on the ledger. For the medium-term trajectory, the critical factors will likely be the legislative fate of the CLARITY Act and the final disposition of today’s billion-token release into the circulating supply.
Bitcoin began the week under significant strain, with its price action reflecting broader market anxiety. The sell-off appears driven by a confluence of factors, including political uncertainty in the United States and a notable cooling of institutional demand through exchange-traded funds. Beneath the surface, however, several ongoing developments could hold long-term significance for the cryptocurrency sector.
A prevailing “risk-off” sentiment across financial markets served as a primary catalyst for the downturn. Investors are currently shunning riskier assets, with two specific issues amplifying the pressure:
In this context, Bitcoin’s price currently stands at $84,570.41, having touched a new 52-week low on Friday.
The price decline triggered a chain reaction within the derivatives market. Data indicates that futures positions worth more than $1.6 billion were liquidated within a 24-hour window, the majority being long positions. These forced liquidations act as an accelerant: when leveraged bets are unwound, additional selling pressure floods the market.
The weakness was not confined to Bitcoin. Major alternative cryptocurrencies also experienced sharp declines, erasing over $100 billion in total crypto market capitalization within hours.
Despite the overwhelmingly negative sentiment, certain developments suggest a more complex picture than a simple bearish trend, helping to explain the market’s contradictory signals.
Regulatory progress offers one such example. On January 29, the U.S. Senate Committee on Agriculture advanced the “Digital Commodity Intermediaries Act” (DCIA) by a narrow 12-11 vote. The margin is less critical than the milestone: this marks the first time a major crypto market structure bill has cleared a Senate committee. This step could eventually grant the Commodity Futures Trading Commission (CFTC) clearer regulatory authority over digital commodities like Bitcoin.
Simultaneously, corporate buying activity continues. MicroStrategy reported acquiring an additional 2,932 BTC, bringing its total holdings to 712,647 BTC as of January 26. Separately, Japan’s Metaplanet announced plans to raise up to $137 million, with a stated intention to reserve a significant portion for further Bitcoin purchases. This demonstrates that some corporate treasuries view the current price pullback not as a deterrent, but as an opportunity within a longer-term accumulation strategy.
As the week progresses, the focus shifts to whether the market can stabilize following the breach of key support levels. A failure to consolidate at current prices leaves the environment vulnerable to further selling. Conversely, a meaningful recovery would be necessary to shift the short-term sentiment.
A significant security breach has impacted the Solana blockchain ecosystem, with the decentralized finance (DeFi) dashboard platform Step Finance reporting a major theft from its treasury. On January 31, attackers successfully drained approximately 262,000 SOL tokens from several of the project’s wallets. At the time of the incident, the stolen cryptocurrency was valued at roughly $29 million.
Step Finance, which markets itself as the “front page of Solana” by providing users a consolidated view of their positions across multiple protocols on the network, has confirmed the compromise. The project stated that multiple treasury and fee-collecting wallets were affected. According to blockchain data, the hackers first staked the SOL tokens before moving them out of the project-controlled addresses.
The platform has launched an investigation and is working with cybersecurity firms to determine the root cause. It remains unclear whether the exploit resulted from a vulnerability in a smart contract or from a failure in access control mechanisms. These details are a primary focus of the ongoing probe.
This security incident occurs during a period of substantial growth and rising institutional interest in the Solana network. Activity on the blockchain has surged recently, partly fueled by heightened trading in tokens associated with artificial intelligence projects. Solana’s high transaction throughput has been a key point of attraction.
In a notable development, asset manager WisdomTree recently expanded its tokenized fund offerings onto the Solana blockchain, citing its speed and low-cost structure. Furthermore, investment flows into Solana-focused funds have remained consistent despite broader market volatility, underscoring sustained investor confidence.
The attack on Step Finance highlights the persistent security challenges facing decentralized finance projects, even on established networks. Market participants are closely monitoring the investigation’s findings, which could have implications for perceptions of DeFi security across the entire Solana ecosystem.
Looking ahead, a major network upgrade known as “Firedancer” is seen as a critical development for Solana. The migration of validators to this new client software is designed to significantly enhance the network’s speed, efficiency, and, crucially, its decentralization. The coming weeks will reveal whether the current institutional momentum can outweigh the fresh security concerns prompted by this multi-million dollar theft.
The Ethereum ecosystem finds itself navigating a complex landscape where significant technical advancements are being overshadowed by a high-profile security breach. This divergence between fundamental network upgrades and immediate market sentiment is creating a cautious atmosphere among investors.
Market confidence was shaken on January 30th following the revelation of a substantial security incident. In a sophisticated “address poisoning” attack, approximately 4,556 ETH were stolen. According to blockchain security firm Cyvers, the victim was tricked into sending funds to a malicious wallet address that closely mimicked a legitimate one.
This deceptive tactic relies on creating addresses with similar starting and ending characters to those of frequently used wallets. Users who do not meticulously verify the entire address string during copying can easily transfer assets to the wrong destination. Crucially, this event highlights the inherent risks associated with self-custody solutions rather than indicating a flaw in the core Ethereum protocol itself.
Fundamentally, the network is emerging from a period of substantial technical development. The Fusaka (Fulu-Osaka) upgrade, activated on December 3, 2025, is now confirmed to be fully operational, dispelling prior speculation about its status.
A central component of this upgrade is PeerDAS (Peer Data Availability Sampling). This innovation allows network validators to verify data through small, random samples instead of downloading entire datasets. The result is a reduction in data costs and a significant increase in data capacity—a critical improvement for Layer-2 networks that depend on affordable data availability. This step further solidifies Ethereum’s “rollup-centric” roadmap.
Despite these underlying technological strides, Ethereum’s price appears pressured. As of Friday, the asset was trading at $2,818.82, reflecting a daily decline of 6.25%. This movement continues a trend of investor wariness in the current climate.
Key takeaways from the present situation include:
A pressing question for traders is whether the $2,500 support level will hold. A breach below this zone could trigger additional selling pressure, whereas a successful defense would likely redirect attention to the efficiency gains delivered by the Fusaka upgrade.
Looking ahead, the next major developmental phase, “Glamsterdam” (Glamour-Amsterdam), is anticipated later this year. This upgrade is expected to introduce features like ePBS (enshrined Proposer-Builder Separation) and BALs (block-level access lists), aiming to further enhance network efficiency and censorship resistance.
Bitcoin Faces Mounting Pressure as Risk Aversion Intensifies
A surprising leadership transition at the U.S. Federal Reserve, combined with heightened geopolitical tensions, has placed significant downward pressure on Bitcoin and the broader cryptocurrency market at the start of the week. This confluence of factors is driving investors away from risk-sensitive assets, with digital currencies experiencing pronounced and immediate selling pressure.
Geopolitical Tensions Compound Market Anxiety
Beyond monetary policy concerns, several geopolitical developments have further dampened investor sentiment. Reports of an explosion at Iran’s Bandar Abbas port, alongside a partial U.S. government shutdown that commenced over the weekend, have contributed to a classic “risk-off” environment. Historically, cryptocurrencies have shown heightened sensitivity during such periods of global uncertainty.
Technical indicators reflect the bearish momentum. Bitcoin touched a 52-week low of $84,570.41 on Friday, marking a daily decline of -5.15%. The Relative Strength Index (RSI) reading of 38.1 underscores the sustained selling pressure.
Fed Leadership Shift Alters Monetary Policy Outlook
The initial catalyst for the market’s nervousness was the appointment of former Fed Governor Kevin Warsh as the next chair of the U.S. central bank. Market analysts, cited by Reuters, view Warsh as a candidate potentially less supportive of risk assets. This has fueled concerns that monetary policy could adopt a tighter stance in the future.
For crypto markets, this often translates into a clear pattern: reduced risk appetite, lower leverage utilization, and consequently, accelerated selling. This effect is magnified during periods of thin liquidity.
Thin Liquidity and Liquidations Exacerbate Decline
The downward move was amplified over the weekend as large sell orders had an outsized impact in a low-liquidity environment. Market participant Chris Soriano of BridgePort described a phenomenon of “Phantom Liquidity” to CoinDesk, where forced liquidations of leveraged positions meet shallow order books, causing buy orders to vanish and prices to drop erratically.
Supporting this, data referenced by PANews shows nearly $2.2 billion in crypto futures were liquidated within a 24-hour window. The breakdown highlights the concentration:
– Approximately $679 million in Bitcoin futures liquidations
– Roughly $961 million in Ethereum futures liquidations
– A broad decline was also observed in major altcoins including Solana, BNB, XRP, and Dogecoin
Sustained ETF Outflows Signal Institutional Retreat
Adding to the selling pressure is a continued withdrawal of institutional capital. According to Farside Investors, U.S. spot Bitcoin ETFs recorded net outflows of $1.61 billion in January 2026—marking the third-largest monthly withdrawal on record. Notably, about $1.49 billion of that total exited in the week leading to January 30.
A critical detail from SosoValue, cited by Bloomingbit, indicates this is the first instance of three consecutive months of net outflows since the launch of spot ETFs in January 2024. Among individual funds, BlackRock’s IBIT saw the largest weekly outflows at $947.2 million, followed by Fidelity’s FBTC with $191.5 million.
Regulatory Meeting Offers a Glimmer of Focus
Attention now turns to a potential source of future clarity. The White House is scheduled to host banking and crypto industry executives on Monday, February 2, as reported by Reuters. The agenda centers on breaking the deadlock in U.S. crypto regulation, with specific disputes around stablecoin rewards in the CLARITY Act expected to be discussed. The Blockchain Association has confirmed its participation.
In the near term, the market’s direction remains heavily contingent on the overarching risk sentiment. Key factors include the Fed transition, the flow of geopolitical news, and whether the ETF outflows establish a persistent trend or begin to subside following the weekend’s volatility.