XRP Is Lagging Behind Bitcoin (BTC) and Crypto Market – Here’s What Could Trigger Long-Awaited Ripple Effect
Bitcoin has now rallied 175% from its 2019 bottom, soaring from $3,409 to $9,408 at time of publishing, according to CoinMarketCap.
The rising BTC tide has lifted a lot of crypto boats, including Ethereum, which shot from its yearly low of $103 to its current price of $183 – a 77% increase.
But the third-largest crypto asset by market cap, XRP, is up a relatively weak 24% this year, from its low of 0.2390 to the current price of 0.2984.
XRP’s performance comes amid a steady stream of news from Ripple, which owns more than half of the total supply and consistently announces new investments designed to boost the digital asset’s ecosystem. Meanwhile, Ripple denies that its routine sales of XRP have any impact on its price.
The situation has Redditors wondering what could trigger a catch-up rally.
In a new post on the Ripple subreddit, a user asks how increasing utility of XRP by banks, financial institutions and tech startups could boost the price.
The top answer, from Redditor citriclem0n, points to the age-old concept of supply and demand and highlights long-term liquidity as the key.
“As utility increases, there will be more liquidity in the market – more buyers and sellers. This will attract market makers who want to make margins on trades.
Market makers need to buy and hold on to large stacks of XRP and fiat (all different currencies) in order to smoothly fund their operations. These are some of the people who will be buying and holding XRP and pushing the price up. XRP utility is like a reef, and market makers are some of the fish that hang out in the reef.”
The user suggests that a boost in liquidity and utility could trigger renewed rounds of speculation on the future price of the digital asset.
“As liquidity increases and people see that XRP might be a useful asset for other tools as well, people will speculate that the price of XRP will be higher than it is today, and they will buy and hold XRP, taking it off the market and helping to encourage the prices to increase in the future. Another type of fish in the reef.”
“Other uses of XRP may be created, a prime example being the on-ledger stable coins suggested by David a few weeks ago. These stable coins are obviously useful in their own right as proxies for fiat, and the on-ledger mechanism for them to exist requires XRP to be locked up as collateral for them. This is another way that XRP is bought and held for long periods.”
During the 2017 crypto bull run, XRP crawled behind the rest of the crypto market until suddenly surging from $0.2340 to a high of $3.71 in less than a month. Whether past is prologue remains to be seen.
You can check out the full post here.