4 December 2020

While there’s been all the buzz around Bitcoin (BTC) over the last few months, Ripple’s XRP and the world’s third-largest cryptocurrency turns out to be the dark horse for the week. In a week when we’ve seen prices pull back across the cryptocurrency market, XRP has surged more than 100% over the last four days hitting its new 2020-high of $0.76 earlier today on November 24. Although XRP has cooled off a bit from its peak levels, it’s still flushed with massive trading volumes and 34% higher in the last 24 hours. [caption id="attachment_8997" align="alignnone" width="1200"]XRP-Price-and-Volume-Correlation Via: TradingView[/caption] Figure 1: XRP Price & Volume Correlation At press time, XRP is trading at $0.61 with a market cap of $26.7 billion. This is for the first time in the last two years since mid-2018 that XRP has attained these levels. Until now, the third-largest cryptocurrency has been moving continuously sideways and has shown a laggard performance. The latest rally in the XRP Price is the outcome of the overall altcoin market rally as Bitcoin cools-off after consecutive weekly gains over the last few months. As we can see on CoinMarketCap, almost all of the top-ten altcoins have surged anywhere between 20-120% beating BTC’s percentage weekly gains. Also, altcoins have added a massive $40 billion to the overall cryptocurrency market in the latest price rally. This has pushed BTC’s dominance to drop by 5 odd percentages which are currently at 61% of the overall cryptocurrency market cap. Well, to sustain any further rally, it is very crucial that XRP closes the day above $0.60 for a sustained up-move to $0.70 and above. Volatility has currently ensued XRP has been majorly fluctuating above and below $0.60 levels. On the downside, $0.45 serves crucial support.

The Fundamental Factors Pushing the Behind the XRP Price Rally

While XRP was showing a muted performance for a long time, there was certainly some fundamental build-up in the backend. The three major fundamental developments pushing the XRP price could be the surge in the unique addresses, buybacks from Ripple, and the possibility of a new product release. Let’s take a look at some on-chain data to understand the ongoing activity in the Ripple XRP ledger aka blockchain that has spurred the recent move. In the last few days, the total unique addresses associated with XRP surged and it further intensified with XRP surging 27% on Sunday, November 22. On-chain analysis firm Santiment noted that the unique addresses interacting with XRP were 24,408, the highest since May 1st. [caption id="attachment_8998" align="alignnone" width="1200"]XRP-Active-Addresses-vs-Price Via: Santiment[/caption] Figure 2: XRP Active Addresses vs. Price (Santiment) Active addresses can increase with the price surge for reasons like higher accumulation as well as a general surge in the blockchain activity. The second reason could be the massive buybacks from Ripple during Q3 2020. During the third quarter, the San Francisco-based blockchain firm bought $45.5 million worth of XRP as part of the repurchasing program. In its market insights report for Q3 2020, Ripple noted: “Ripple is purchasing – and may continue to purchase – XRP to support healthy markets. This is a near-term product solution for the Line of Credit beta. Long-term, Ripple is building new ODL capabilities to dynamically source XRP liquidity from the open market, not just Ripple”. A buyback in any market, coming from the company issuing the asset, is always considered a positive sign. It shows the growing confidence in the asset and can spur the demand.

Ripple’s New Developments In The FinTech Market

On the other hand, Ripple continues to steer ahead with some new developments for blockchain-based payments in the FinTech market. Earlier this month, Ripple Labs filed a new trademark with the USPTO dubbed Paystring. The trademark gives a hint about the product stating “PAYSTRING trademark registration is intended to cover the categories of electronic financial services, namely, monetary services for receiving and disbursing remittances and monetary gifts in fiat currencies and virtual currencies over a computer network and for exchanging fiat currencies and virtual currencies over a computer network.” On the other hand, Ripple is looking to actively engage with central banks worldwide and work in co-ordination with to support CBDC initiatives on the XRP Ledger. The latest job postings from Ripple shows that it is looking for a senior director to engage with central banks and educate them about digital currencies. Ripple is a blockchain leader when it comes to offering instant cross-border payment solutions with settlement periods as low as 4 seconds using XRP. It has also developed on-demand liquidity products like xRapid that uses XRP to fuel instant liquidity and settlement payments worldwide. In a podcast interview with The Scoop, Ripple CEO Brad Garlinghouse noted that central banks can leverage the XRP Ledger to issue different stablecoins. With its XRP cryptocurrency, Ripple has also met several roadblocks. It has faced multiple lawsuits for its XRP IPO of 2013 where many claim XRP as a ‘security’ token, however, none of the claims have been proven yet legally. On the other hand, citing several regulatory hurdles, Ripple has also expressed the desire to shift out of the U.S. to other crypto-friendly jurisdictions like Dubai, U.K, Switzerland, and Japan.
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