What’s going on with the price of Ripple?

Anyone involved with crypto currencies knows the story of Ripple’s native crypto asset, XRP. Back in early December, one Ripple was trading at $0.24. It shot up in price to $3.40 in early January, primarily driven by speculation of a listing on Coinbase, rumours of what may be listed in their Q4 markets report and general optimism over statements from their CEO on new partnerships.

Then it began to dip. After such a rise this was not unexpected, but the dip continued despite continued good news from Ripple. The reasons behind this were many and include the removal of inflated Korean Exchange from the valuation of XRP, the announcement from Coinbase that it was not looking to add any new cryptocurrencies in the near future, a standard Q4 markets reports, and the Weiss cryptocurrency grading.

Let’s look at each one of these in turn and analyse what could change to begin to drive the price upwards again.

Korean Exchange prices for cryptocurrencies widely differed from most other crypto-exchanges. The inflation was in part caused by the difficulty in getting money out of South Korea due to its strict money transfer laws. On Jan 8 Coinmarket cap removed Korean exchanges such as BitHumb from its pricing, it did this at midnight but did not announce it till the following morning. For those investors who follow price more than news this signified a big trend downwards and resulted in more selling. Since then speculation and rumours over the Korean government plans for cryptocurrencies have added to a steady trend downwards.

There’s been more clarity in recent weeks and while there is concern that factions of the Korean government want to take a hardline on crypto’s, echoing that of the Chinese government, their official line that they are not planning to ban them but reduce the opportunity for fraud and money laundering was cemented with their ban of anonymous bank accounts. Since then the Korean exchanges prices have fallen in line with the rest of the world and been reincorporated into general pricing. This saw a minor spike in prices. The long term effect should be positive though. South Korea is a major market for crypto, its increasing regulation is a worry for some but regulation and the removal of criminal loop holes is generally beneficial long term. While it may reduce some trading similar to the shut down of the silk road, the increased confidence it brings, combined with a market that is hungry for cryptocurrency can only be a good thing.

The news that Coinbase was not adding Ripple, or more correctly had no plans to add further cryptocurrencies in the near future was a signal for much panic selling. Prices fell by a third in direct response showing that the news was interpreted by many as a direct blow for Ripple, however this wasn’t the case. Coinbase’s decision was driven by infrastructure problems and allegations over market manipulation following their listing of Bitcoin Cash. Coinbase simply couldn’t add Ripple with the amount of rumours of its intended date of listing.

Coinbase will add Ripple in the near future. Website glitches and leaks have shown that the infrastructure has been put in place for Ripple to be added but just not now. As the largest exchange in the US it cannot ignore the world’s 3rd largest cryptocurrency. Its just a case of managing its release. That said XRP’s future does not hinge on being listed on B2C exchanges. Ripple’s plan via xCurrent and xRapid is to replace, at least in part the SWIFT banking platform, the volume of money transferred by this dwarfs the numbers which Coinbase or any other exchange could bring. That said for a XRP hodler the boost that an exchange like Coinbase could bring would be significant.

What does the future hold? Ripple continue to aggressively seek listings on exchanges, while Coinbase maybe on hold, other’s are seeking to reap the benefits. Coinsquare, Canada’s largest exchange has announced plans to list Ripple. Bitoasis, Dubai’s biggest exchange plans to list Ripple later this week, in a country which has so far been very favourable to cryptocurrencies. While I don’t think either of these will have the same impact as Coinbase as their seems to be a whole lot of sentiment and emotion baked into Coinbase beyond the actual listing, the future looks promising for XRP. However its key to remember that while exchanges are positive and will increase trading, they are a drop in the ocean in Ripple’s overall business plan.

The Weiss rating, the Q4 markets report and new partnerships were all announced on the same day. Many were expecting Weiss to grade XRP highly but given its volatility it received a fairly average grade. The Weiss report measures on 4 pillars:

  1. The Cryptocurrency Risk Index measures (a) relative and absolute price fluctuations over multiple time frames, (b) declines from peak to trough in terms of frequency and magnitude, (c) market bias, whether up or down, and other factors.
  2. The Cryptocurrency Reward Index evaluates (a) returns compared to moving averages, (b) absolute returns compared to a benchmark, (c) smoothed returns, and other factors.
  3. The Cryptocurrency Technology Index evaluates the level of anonymity, governance capabilities, the ability to upgrade, energy efficiency, scaling solutions, interoperability with other blockchains, plus other technological strengths or weaknesses.
  4. The Cryptocurrency Fundamental Index measures transaction speed and scalability, market penetration, network security, decentralization of block production, network capacity, developer participation, public acceptance, plus other key factors.

Ripple’s general volatility resulted in a grading that many weren’t expecting, but the intended audience of the Weiss report needs to be understood. Professional traders look to hedge risk while driving profits via relatively small % returns across large sums of money. While the average XRP hodler looks to drive large % returns across relatively smaller amounts of money. The effect of the report was not damning for XRP but also would not have caused a large flow of ‘fat cat’ investors to buy, however it will have raised their curiosity and perhaps triggered a desire to begin to accumulate at the lower prices available.

The markets report was considered by many underwhelming in contrast to their expectations, but these expectations were unrealistic. Its a reflection of what has already happened not a manifesto of surprise announcements and hitherto secret ambitions. The 2 further announcements were positive but while Mercury FX and IDT Corporation are huge names in business they are not the brand names that will wet the average hodler’s appetite and drive a furore of bullish price rises. For clarity these are not the 2 household names that Ripple announced when stating that 2 more of the world household ‘money transfer’ agents were to be announced as partners at some point in the future.

The effect of these names and others should become more apparent when they finish their pilot phases of xRapid XRP use. When these pilots finish is not known and they could be extended for many reasons but you can imagine 1, 3 and 6 month pilot windows. As these pilots come to fruition we should see price changes.


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