XRP Crypto Could Revive Once Bitcoin and Ethereum Recover
Ripple (CCC:XRP-USD) cryptocurrency has had a rough month. It ended last month at $1.011 per XRP crypto token but was at 62 cents as of July 15. That is a 38.7% drop in one month. In fact, the cryptocurrency is actually well off its peak price of $1.839 on April 13. However, so far this year, it is still up 161% year-to-date from 23.744 cents at the end of December.
Not to worry. If Bitcoin (CCC:BTC-USD) and/or Ethereum (CCC:ETH-USD) recover, there is good reason to believe that XRP will recover as well. This is seen every time these cryptos move up and XRP does as well, and vice versa.
The one major thing holding back the crypto is its fight with the SEC. I wrote about this fight last month. The markets probably don’t care who wins. They just want it to be resolved. In the long run, XRP crypto will likely rebound quite significantly once this regulator-crypto fight ends.
XRP’s Standout Features
XRP crypto was launched in 2012. According to Coindesk, while XRP and Ripple are linked, they are two different entities. Ripple is a fintech company that builds global payment solutions. XRP is a blockchain platform for microtransactions, remittances and online payments.
The XRP supply is not mined like Bitcoin and Ethereum. It is controlled by the Ripple trust that owns a pre-mined escrow account. It holds 55 billion of the 80 billion XRP tokens. The Ripple escrow account can sell 1 billion XRP tokens a month. This was to improve the transparency and predictability of XRP being sold by Ripple.
As of April 8, the escrow account held 47.8 billion XRP tokens. Coinmarketcap indicates that XRP is the sixth largest cryptocurrency in the world. It has a $27.799 billion market capitalization. Assuming it continues to track both Bitcoin and Ethereum, there is a good chance that it will keep this relatively high valuation.
The XRP blockchain does not use mining (proof-of-work) or a proof-of-stake system to validate its transactions. XRPL uses a different set of rules called the Ripple Consensus Protocol Algorithm (RCPA). The RCPA defines how XRPL is managed by a network of independent Ripple validator nodes. Any Ripple transaction needs to be verified by at least 80% of the nodes on the network.
Concerns have arisen about how certain insiders have been selling their XRP currency. For example, Jed McCaleb has sold more than 100 million XRP tokens since the beginning of the month. He is Ripple’s former CRO and is still receiving payments from Ripple, which he immediately sells. That puts selling pressure on the cryptocurrency.
However, on the positive side, two Japanese firms have turned to Ripple to power their remittances platforms. This is exactly the kind of signup that will make XRP more popular as a cryptocurrency, even though it involves Ripple, the company, not XRP, the cryptocurrency.
What to Do With XRP Crypto
XRP is facing a lot of negative news, especially since its slide has been so drastic in the past two months. Some feel that it won’t ever recover, at least anytime soon.
But the fact remains that the token has been able to track the movements of Bitcoin and Ethereum for a good number of years. I suspect that this trend will continue in the future. If BTC and ETH tokens have bottomed out, there is likely a similar turnaround waiting for XRP. So don’t lose hope, at least now that it looks like cryptos have reached a trough.
On the date of publication, Mark R. Hake held a long position in Bitcoin and Ethereum but not any other security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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