«News like this can get a lot of traction and easily stir market sentiment but they often prove of little significance in the long term.» At the same time, Schwartz has stressed that this is just his personal opinion that is not backed up with facts and data. Cryptocurrency firms aren’t regulated in the way that other financial firms are. There are a few big reasons behind XRP’s nosedive over the past few months. One of the main differences between XRP and Bitcoin is that a set number of XRP coins have been produced, while new Bitcoin can be mined.
- According to Ripple escrow wallet tracker XRPArcade, Ripple unlocked a total of 5 billion XRP so far in 2020—equivalent to five percent of the total supply.
- While Tezos has similarly high inflation, its price has performed well in the last year—up 60%.
- The same is true for a bounce off the lower trend line, which was seen on July 20.
- The blockchain payment company moved around 100 million XRP worth nearly $40 million to exchange wallets on March 3.
- As fiat money declines in power, the crypto market is expected to rise, creating an opportunity for many traders to profit from it.
But, it’s still not clear exactly how much of this made its way onto third-party exchanges. (After publishing, Ripple contacted us to say that the firm only made $1.75 million in direct institutional sales and the rest went back into its own escrow accounts). It isn’t hard to work out why XRP’s circulating supply is growing at a staggering rate either.
It will encounter $1.27, a brutal resistance barrier that has prevented its previous rally, and the $1.70 ceiling before having a chance to head to the 2018 all-time high at $3.31. Get stock recommendations, portfolio guidance, and more from The Motley Fool’s premium services. At the same time, Schwartz has stressed that this is just his personal opinion that is not backed up with facts and data.
The same is true for a bounce off the lower trend line, which was seen on July 20. So far, XRP price rallied 75% from this point and is fast approaching the channel’s https://www.tokenexus.com/cryptocurrency-investment-strategy-2020/ midpoint. The uptrend from July 20 to August 8 was the initial leg up that reignited the flame in many altcoins, including Ripple, as shown in the chart below.
From a price action perspective, Ripple has shattered the 200-week Simple Moving Average (SMA), suggesting the start of a bearish trend. With Bitcoin price looking to crash even deeper, there is a good chance Ripple could breach the immediate support level at $0.322. Such a development would open the path for the token to retest the volume Point of Control (POC) since 2017. Bitcoin open interest outperformed the entire cryptocurrency market in August, amid hype relating to Bitcoin Spot Exchange-Traded Fund (ETF).
However, a bright side to this massive bloodbath is that patient market participants will get to buy XRP price at a massive discount. XRP price has long been stuck in the battle between the US Securities & Exchange Commission (SEC) and Ripple. The announcement of this lawsuit caused a massive setback to the altcoin, leading to a 60% crash in roughly two weeks. To sum it up, Ripple converted the PR nightmare of a lawsuit to leverage support from the eastern companies. While it is unlikely the case will resolve anytime soon, a positive development, especially a win, will undoubtedly be a trigger that XRP price might need to propel a whopping 300%.
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Each quarter, Ripple—the company that helps to maintain the XRP blockchain—releases hundreds of millions of XRP from its escrow wallets. This XRP is sold to help fund Ripple developments, build out the utility for XRP, and onboard new partners, among other things. Schwartz used Google in 2000 as an example of how individuals may have been dubious about the search engine’s ability to create billions of dollars worth of new wealth at the time. He thinks that right now, the situation with cryptocurrency is comparable.
- With a further 49.4 billion XRP still locked in Ripple’s escrow contracts and 1 billion XRP scheduled for release each month until mid-2023, this issue isn’t likely to go away any time soon.
- A successful breakout puts XRP price just above the third hurdle at $1.87, opening the path to the 2018 all-time high at $3.31, as discussed above.
- A combination of technical, fundamental and social sentiment indicators spell downside risks for XRP after its price rises over 8% week-to-date.
- There’s a fairly simple reason why the price of XRP is pumping right now, which is that the Ripple-SEC case has witnessed some developments in the past few days which suggest it could be coming to a positive close.
- According to Reuters, Bitcoin tumbled below the $40,000 mark on Wednesday to a three and a half month low as selling in digital coins intensified after China’s ban was announced.
- The 365-day Market Value to Realized Value (MVRV) model, currently hovering around 64%, goes against the bullish outlook discussed above.
As a result, prices often move together as investor sentiment waxes and wanes depending on whether more people become convinced of crypto’s future potential or not. Simply put, “the markets are still trying to figure out if crypto is going to be the next big thing.» The SEC v. Ripple lawsuit has been ongoing since December 2020 and could make or break XRP price. Since we’re exploring the worst-case scenario, let’s assume that the SEC wins the battle, which would make XRP a security token and not a commodity. This situation could cause crypto exchanges to delist it and panic investors into selling their holdings.
While Bitcoin price rallied 59% during the said time frame, XRP price climbed 63%, suggesting that altcoins outperformed big crypto. The same trend can be seen with Ethereum and other altcoins, which indicates that altcoins are due for a massive run-up. The blockchain payment company moved around 100 million XRP worth nearly $40 million to exchange wallets on March 3. Investing why is xrp price so low is always a risk but investing in cryptocurrency is an even higher risk as they are VERY volatile, so you should be prepared to lose your money. Before investing in any cryptocurrency, you should be aware of all the risks involved. For instance, on Sept. 3, an anonymous address sent 29.7 million XRP tokens, worth around $15 million, to the Bitstamp exchange.
The comparison follows a report by Bitfinex, noting that outflows reached $55 billion, with the liquidity crunch giving event-based volatility more influence on prices. The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision. The drop in value of several cryptocurrencies follows the news China has banned financial institutions and payment companies from providing services related to cryptocurrency transactions. According to data from Messari, XRP now has by far the highest rate of inflation of any large-cap cryptocurrency, at 20.5% per year.
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«Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment. The drop in value for many cryptocurrencies in recent days could also be attributed to tweets from Tesla CEO and SpaceX founder Elon Musk. It’s thought up to one billion XRP coins are released each month, while Ripple owns a backlog of 55billion coins in case of market volatility. In total, there are around 100billion XRP coins, although not all of these are in circulation.