Friends, today we're diving into a very interesting case. We'll discuss what led to the incredible surge in XRP over the past month. We'll definitely talk about whether I was wrong about this token and examine whether this growth is an artificial pump or organic.
Does XRP have a future? Of course! We'll also touch on some of the drawbacks and weaknesses of this project.
Disclaimer: Before we get started, let me remind you, that this is not financial advice. All investment decisions should be made independently, so make sure to conduct your own market and token research before investing.
Table of Contents
Why is XRP pumping so hard?
So, what caused this remarkable surge? Over the past month, there's been a slew of extremely exciting and positive news for XRP.
Let's break it down step by step. This month has truly been outstanding, and it all starts with the US elections. Trump won the presidency, a leader known for his pro-crypto stance and statements.
Many might wonder why this matters so much for XRP, but the answer is simple. Ripple has been battling the SEC for years, and with Trump's leadership, this situation is likely to change. Why? Just take a look at this short segment from his speech.
It's already clear, these aren't just empty words or hype. Trump has already selected the next SEC chairman, and this could very well resolve Ripple's issues with the SEC. The nominee, Paul Atkins, is highly receptive to collaboration with cryptocurrency projects.
Here's what Ripple's CEO had to say about the situation with Trump.
This was perhaps the biggest factor behind XRP's significant growth, but there were plenty of other exciting developments too. For example, Grayscale's Trust Investment Fund is now available to accredited investors.
While this might not bring an immediate influx of liquidity, it's undeniably a bullish indicator. Additionally, Ripple partnered with Archax to launch the first tokenized money market fund on the XRP ledger. This partnership created a significant buzz around the product and the token itself.
Looking at the raw numbers, nearly every metric showed fantastic growth in Q3. Although we don't yet have exact data for Q4, it's already safe to say that it's not only on par but likely even better. Finally, Ripple received approval from the New York State Department of Financial Services to launch their own stablecoin, RLUSD.
The RLUSD will initially be issued on the XRP ledger and Ethereum blockchains. These developments have been the primary drivers of XRP's significant price surge. I hope this breakdown was useful for you.
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Was I wrong about $XRP!?
Next, let's discuss whether I was wrong about this token in the past. Several months ago, I wrote a post saying that I didn't see significant potential in this asset. To clarify, I mentioned that this project is solid, with a decent foundation, but it has a set of drawbacks that would prevent it from becoming the best or most relevant.
So, let's find out if anything has changed. First, I want to clarify that I never said this token had no potential. I even stated that I believe it will return to its previous highs and might even surpass its all-time highs.
However, most of these pumps are solely news-driven and nothing more. This is clearly evident from the token's chart. All the pumps between the previous and the current bull run were triggered by news, such as winning the lawsuit against the SEC or similar announcements.
So, the question arises, can this token grow organically without relying on such news? Let's try to figure it out. This is one of the older assets, existing since 2013. Its primary idea is to create the SWIFT of the crypto world.
Essentially, they aim to replace outdated international transfer methods with blockchain-based transactions. Overall, it's a solid initiative, and they have an impressive list of partners who, in one way or another, utilize their technology. This is undoubtedly a positive.
But the question is, does it appeal to retail investors? To ordinary people who are just entering the crypto space and deciding what to buy? After all, it's this influx of new liquidity that propelled projects like Solana to grow. Unfortunately, this is where XRP falls short. It doesn't have the same appeal to retail investors.
However, it does enjoy support from major Web2 companies, which is still a positive factor. But, that said, there are also a number of drawbacks that, in my opinion, could hinder the token's further growth. Let me outline these for you to provide a clearer picture.
First of all, despite the fact that the token has been around for over 10 years, only about 57% of its supply is currently in circulation. For me, this doesn't inspire much confidence. They regularly unlock tokens from their escrow wallets, distributing portions to treasury wallets and sales wallets.
Here's an example of how these unlocks and fund allocations typically occur. Ripple unlocked 1 billion XRP on September 1, worth approximately $570 million at Finbold's reporting time on August 31. The company then reserved 200 million XRP in its treasury account, re-locking 800 million tokens and escrows to December 2027.
As things developed, the company added 150 million more XRP to Ripple 1, the treasury's liquid account, for its sales. The selling activity followed as expected, with a 150 million XRP sale on September 13 and a 200 million XRP sale on September 23. Overall, this creates negative pressure on the asset, potentially deterring new investors from getting involved.
Notably, XRP has had one of the highest ongoing supply inflations among all cryptocurrencies since 2012. Ripple has unlocked and distributed over 56.5 billion XRP throughout that time, still holding over 43 billion tokens. However, not everything is bad, as there are problems that are being addressed.
For example, the implementation of their stablecoin, which I mentioned earlier, as well as the likely resolution of issues with the SEC. But what is the potential for future growth? Let's dive into that.
Future price potential!
We've reviewed the key factors that directly influence the future of this token. Now, let's move on to the price prediction.
It's just my personal opinion and market analysis. It's important to note that, overall, experts attribute the recent pumps in the token's price to the actions of major players, specifically, whales on the Coinbase exchange. Over the past 30 days, Coinbase's minute-level price premium has ranged from 3% to 13% during the surge.
Meanwhile, Upbit, a Korean exchange with more XRP investors than Binance, has shown no significant premiums so far. This is critical because growth driven solely by whales is not necessarily a positive indicator. The main issue is that the growth we're seeing now cannot be considered organic, and that's not ideal.
The increase didn't occur because investors suddenly became interested in the infrastructure or ecosystem, but rather due to a wave of positive news. While that's not inherently bad, organic growth, driven by genuine demand and a thriving ecosystem, is much healthier. For example, we've seen this with Solana, which has gained massive momentum thanks to retail interest and new users.
Speaking of Solana, many people believe that, in the long run, XRP has the potential to surpass Solana. However, I disagree. Solana is currently becoming a technological hub, capturing part of Ethereum's market and offering very clear utility.
In contrast, XRP focuses on business partnerships with large companies and, from a crypto project perspective primarily offers a stablecoin, but enough of that let's get back to XRP. Personally, I haven't changed the percentage of XRP in my portfolio and still believe that this token will continue to grow, albeit not as dramatically as in the past month. I don't see any reason why XRP could surpass Solana or Ethereum in the long term.
However, I am confident that it will at least reach its previous all-time high and multiply that by 2-2.5 times at the peak of the bull market. What do you think about this?
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Conclusion
In summary, while XRP has shown impressive growth recently, it is vital to remain cautious. The token's potential for the future is still there, but it must overcome its drawbacks and attract more organic interest to sustain its upward momentum. As always, it’s important to conduct independent research before making any investment decisions.
Frequently Asked Questions (FAQs)
What caused the recent surge in XRP's price?
The surge was driven by a combination of political changes, positive news regarding Ripple's partnerships, and the approval of their stable coin.
Is XRP a good investment?
This depends on individual investment goals and risk tolerance. While there are promising developments, potential investors should conduct thorough market research.
What are the drawbacks of XRP?
- High supply inflation and a significant portion of its supply not in circulation.
- Lack of retail investor appeal compared to other cryptocurrencies.
What is the future outlook for XRP?
The future of XRP remains uncertain. While recent developments are positive, its growth must attract more organic interest from retail investors to ensure sustainability.
Key Metrics Overview
| Metric | Value |
|---|---|
| Current Supply in Circulation | 57% |
| Total XRP Supply | 100 billion |
| XRP Price (Recent Peak) | $0.76 |
| Major Partnerships | Numerous established companies in finance and tech |