Ripple’s XRP
Ripple’s XRP is causing a sensation in the crypto world hitting a 6 year high in the year 2024 December 2, at 2.71, as compared to just 0.61 at the start of the year, giving it an absolute 350% increase. [R] A rise, XRP is the 3rd largest crypto currency in terms of the market capitalisation of a system. Let’s then look at what is behind this rally and make guesses about what the future holds for XRP.
XRP’s price surge is nothing short of remarkable:
- Start of 2024: $0.61
- Current Price (Dec 2): $2.68
- Market Cap: 134 billion.
Although it only partially re-bounded below its peak of $2.71, XRP has gained by 90% in only 7 days and is one of the best crypto-currencies in among the top 100.
1. Political and Regulatory Shifts
Donald Trump, 47th president, carried the day, Gary Gensler, chairman, SEC, left the job and this triggered an avalanche of optimism in the crypto sphere.
The protracted war between Ripple and the SEC appears on the verge of reaching an end, and the exit of Gensler offers possibilities for regulatory normalization on the vacuum.
2. Short Squeeze and Liquidations
XRP market-depth lost $85.5 million in 1 day of liquidations on the current future contracts primarily as a consequence of price-movement seeking bets, i.e., short positions.
[T]he pervasive mood permeated through the derivatives market, prompting some to sell off at a loss.
3. Institutional Demand on Coinbase
XRP is more expensive at Coinbase (3% to 13% more expensive) than at other exchanges because there is high demand in US.
Korean trading platform Upbit, the biggest XRP trading platform, does not exhibit U.S.-based premium, i.e., the premium is a U.S.-based one.
Ripple has eagerly awaited the launch of what it claims to have anticipated for a long time, Ripple’s purportedly long-awaited RLUSD stablecoin which is on the verge of becoming available upon approval by the New York Department of Financial Services (NYDFS). All of which could lead to the similarity between RLUSD to USDC and USDT, i.e.
- Stability: Pegged to US dollar, RLUSD could be a more stable option than XRP when its volatility is taken into account.
- Collateral: Ripple may artificially increase demand for RLUSD from potentially enormous XRP reserves by using its XRP reserves as collateral to generate scarcity and push the price of XRP up.
- Regulatory Confidence: NYDFS approval would enhance RLUSD’s credibility, attracting institutional adoption.
Large investors, or “whales,” have significantly boosted XRP holdings:
679.1 million XRP (US$1.83 billion) in 3 weeks .
The sum of the number of non-empty XRP wallets has accumulated to 5.5 million times for the first time, which means that it is on the way to increase adoption.
There is no single board of thought among crypto professionals as to what the future holds for XRP but optimism continues.
Key Predictions
- Dark Defender: Long-term target is 5.85.
- Javon Marks: Forecasts rise to 2.47.
- Peter Brandt: Offers a risky estimate of $24, on the basis of market liquidity and adoption as the drivers, respectively.
Challenges to Watch
While bullish, XRP is not risk free, marketplace factors include rising interest rates, attacks on regulatory bilge, and market volatility.
Regulatory changes, institutional backing, and disruptive capabilities of applications (e.g., RLUSD) have fostered a favorable climate with respect to the issue of Ripple´s XRP. Regardless of the fact that such positioning (e.g., $24) of XRP in the case market to become a deflationary world is speculation, XRP remains a commodity of interest due to fundamental strength of XRP.
Investors should take their time, diversify, and take decisions in line with risk appetites. Not unlike any other investment, never put more money away than you are prepared to lose.
What’s your take on XRP’s incredible rally? Could it overtake Ethereum in the future? Let us know in the comments!