{"id":13672,"date":"2024-10-14T12:30:25","date_gmt":"2024-10-14T12:30:25","guid":{"rendered":"https:\/\/mycryptomania.com\/?p=13672"},"modified":"2024-10-14T12:30:25","modified_gmt":"2024-10-14T12:30:25","slug":"why-isnt-xrp-price-moving-crypto-pundit-claims-the-answer","status":"publish","type":"post","link":"https:\/\/mycryptomania.com\/?p=13672","title":{"rendered":"Why Isn\u2019t XRP Price Moving? Crypto Pundit Claims The Answer"},"content":{"rendered":"

XRP has been one of the underperformers in the current crypto market cycle, remaining approximately 86% below its all-time high of $3.84 reached on January 4, 2018. Remarkably, despite significant fluctuations in the meantime, XRP is trading at a price similar to where it was one two years ago in October 2022. Crypto pundit known as CryptoTank (@Tank2033js) shared an explanation on X to clarify why the XRP price isn\u2019t moving as some might anticipate. With 214,000 views, the thread<\/a> gained a lot of attention.<\/p>\n

Why Is XRP Price Stagnating? When Will It Change?<\/h2>\n

\u201cI\u2019m getting a lot of comments about XRP price and why it\u2019s not moving,\u201d began CryptoTank. \u201cLet me explain once more how XRP price is determined for the new people to this space and those that still have trouble understanding.\u201d<\/p>\n

According to his analysis, the price of XRP is calculated by dividing the value or volume transacted on the XRP Ledger (XRPL) by the circulating supply of XRP. However, he emphasizes that the commonly referenced circulating supply figure of approximately 56 billion XRP is misleading. \u201cJust because 56 billion is in circulation, it does not mean that the whole 56 billion is on the ledger for use,\u201d he noted. A significant portion of XRP is held in private wallets, by large holders known as \u201cwhales,\u201d or stored on exchanges, and thus not actively participating in daily transactions on the ledger.<\/p>\n

\u201cWhat matters for price is how much of that supply is active on the ledger,\u201d he asserts. Estimating that about 20% of the circulating supply is active daily, he suggests that around 10 billion XRP are in use within the ledger\u2019s ecosystem. This active supply is crucial for providing liquidity in Automated Market Maker (AMM) pools, which facilitate transactions by pairing XRP with other tokens or currencies such as RLUSD (Ripple USD).<\/p>\n

He explains that banks and financial institutions planning to use the XRPL for settlements will operate with their own tokens or central bank digital currencies (CBDCs), pairing them with RLUSD<\/a> and utilizing the liquidity available in the AMM pools. The XRPL employs an algorithm designed to find the most efficient path for settlements, defaulting to XRP as the primary source unless an alternative offers a better route. \u201cThis algorithm uses XRP as the default source of settlement and will only use something else if it\u2019s better than XRP, which most likely won\u2019t be the case,\u201d he elaborates.<\/p>\n

To illustrate the potential magnitude of value transacted on the ledger, CryptoTank highlighted the daily settlement volumes of several major financial institutions. SWIFT, the global provider of secure financial messaging services<\/a>, processes approximately $5 trillion in daily settlements. J.P. Morgan Chase, one of the largest banking institutions in the United States, handles around $10 trillion daily. Bank of America processes about $7 to $8 trillion each day, and SBI Holdings in Japan settles approximately $2 trillion daily. \u201cThat\u2019s about $25 trillion daily in settlement with just four banks\/institutions,\u201d he points out.<\/p>\n

Moreover, Ripple, the company behind XRP, reportedly has over 1,700 non-disclosure agreements (NDAs) with various banks and financial institutions, suggesting a vast network of potential users for the XRPL. By conservatively assuming that only 10% of the settlement volume from these four institutions moves onto the XRPL, he estimated an on-ledger transaction volume of $2.5 trillion daily. To ensure smooth and frictionless transactions without failures\u2014a critical requirement for banks\u2014the liquidity in the AMM pools<\/a> would need to be substantial. \u201cThese pools have to be about double the $2.5 trillion value to avoid failed transactions and friction within the pools. Banks cannot have failed transactions,\u201d he stressed. This means that the total value or volume on the ledger would need to be approximately $5 trillion to accommodate the settlements efficiently.<\/p>\n

Using these figures, he calculates the necessary price of XRP to facilitate this level of daily settlement. \u201cTo determine the price XRP needs to be to avoid friction and have deep enough liquidity pools to settle without failure between different currencies or CBDCs, you take the $5 trillion and divide it by the 10 billion of XRP in the pools,\u201d he explains. This calculation yields a required XRP price of $500. \u201cXRP\u2019s price would need to be $500 to facilitate settlement daily,\u201d he emphasizes.<\/p>\n

\u201cThis is a very basic example of what will happen when these banks start using XRP daily for settlement,\u201d he adds. He acknowledged that other factors could further enhance the value on the ledger, such as the tokenization of assets, debt, and real estate. \u201cThere are other factors like tokenized assets, tokenized debt, tokenized real estate, etc., that will all add value to the ledger in the future,\u201d he notes.<\/p>\n

Addressing skeptics who doubt the potential for XRP to reach such high valuations, he states: \u201cFor anyone saying XRP will never be a high price, you really don\u2019t understand what XRP is going to be used for or how it works. Retail doesn\u2019t matter, market cap doesn\u2019t matter, charts are nice to look at but don\u2019t matter either.\u201d He argues that traditional metrics used to assess cryptocurrency value are less relevant in the context of XRP\u2019s intended utility for institutional settlements.<\/p>\n

\u201cYou can\u2019t chart how much liquidity or depth of AMM pools will be needed to handle the settlement of those 1,700+ NDAs on a daily basis,\u201d he contends. \u201cNobody has any clue how high that number will be. XRP must be a high price or it won\u2019t work efficiently to do what it was designed to do, which is handle large transactions fast and cheap.\u201d<\/p>\n

However, not everyone in the crypto community agrees with his assessment. A user representing chart analysts on X responded to his thread, stating: \u201cWrong: The chart is the only thing that matters. Buy coins based on chart technical analysis and you do a lot better than buying narratives and hoping for it to pump. That\u2019s why 99% of retail fails. Sad but true.\u201d<\/p>\n

In response, CryptoTank defended his position, emphasizing the impending shift in the crypto landscape due to institutional adoption. \u201cYou clearly have no idea how utility tokens work or what is about to take place globally in this space,\u201d he retorted. \u201cSoon retail speculation will be dwarfed by institutional adoption and usage. 99% of coins will become obsolete. The big money is coming into the game and everything will change.\u201d<\/p>\n

At press time, XRP traded at $0.542.<\/p>","protected":false},"excerpt":{"rendered":"

XRP has been one of the underperformers in the current crypto market cycle, remaining approximately 86% below its all-time high of $3.84 reached on January 4, 2018. Remarkably, despite significant fluctuations in the meantime, XRP is trading at a price similar to where it was one two years ago in October 2022. Crypto pundit known […]<\/p>\n","protected":false},"author":0,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-13672","post","type-post","status-publish","format-standard","hentry","category-discovery"],"_links":{"self":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/13672"}],"collection":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"replies":[{"embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=13672"}],"version-history":[{"count":0,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=\/wp\/v2\/posts\/13672\/revisions"}],"wp:attachment":[{"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=13672"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=13672"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/mycryptomania.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=13672"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}