No Highs Without Lows: XRP/USD Forecast

One of the most controversial cryptocurrencies to be discussed in the news is Ripple (XRP/USD). There have been many pieces published indicating different directional moves for the Ripple price, and the price has been extremely volatile over the last few months.

The Basics of Ripple

Ripple, or XRP, is the token of a payment processing company that aims to bring down the cost and time required to transfer funds. The concept of being able to transfer money “anytime, anywhere” has long been touted as one of the many goals of the Internet. Both banks and PayPal have failed in this regard, and there are still prohibitive costs involved in moving payments cross-border.

There is no doubt that instantaneous transactions would have a large market demand. Banks realize they could save both money and time, and also pass some of the savings onto their customers.

One common objection to Ripple is that it is performing one of the many functions other cryptocurrencies are said to do. But Ripple’s transaction fees are even less than those of any competing cryptocurrency, giving it the possibility of dominating the market.

The big thing to note about Ripple is that it is more of a protocol than a cryptocurrency, since the token isn’t necessary for the business to run. Some pundits have been quick to point out the fact that the protocol isn’t tied directly to the success of the business, so it is difficult to judge what the market use of XRP is.

To clarify, the token can be used to perform money transfers, but clients can also form partnerships with the network and set up their own networks that would perform the same function. This creates a situation where Ripple is almost competing with itself.

XRP’s Price History

The current market capitalization of Ripple (as of February 22) is $38 billion, which puts it in the third place after Ethereum and Bitcoin. In early January, its market capitalization peaked at about $123 billion, which put it behind Bitcoin.

Since hitting its record high of just above $3.00 per coin, the price has dropped closer to $1.00. A drop this drastic is to be expected in a market where volatility is the name of the game, and is basically an open access version of the venture capital market. In the last year the price has gone up by a factor of nearly 100x, which represents the huge changes the company has gone through, as well as the increased exposure the token has received.

More recently, Ripple has seen its price traded in a narrow range between $0.87 and $1.39. A combination of press and other economic factors has made it harder to find buyers and break through certain resistance levels. This has meant lower volatility, with a lot of traders closing positions in order to try and recoup their losses on other investments.

Studies on the moving averages and price patterns of Ripple show that it is performing well, but has not shown signs of breaking through its resistance levels anytime soon. This could be a reflection of recent press, or other factors.

Ripple is Tied to Banks

The most important thing of note for Ripple’s value is the number of banks that are actually clients of the company. Every bank that uses it is a signal of verified utility of the protocol, and creates more confidence in the buyers of the token.

In the last few months, there have been numerous allegations that Ripple either didn’t have any banks using it, or already had many banks using it. It depends where you read about it, but everyone has an opinion. The answer is somewhere in between.

As recently as February 21, Ripple announced new partnerships with 5 banking and money transfer institutions. Each one of these partners adds more fuel to Ripple’s fire and makes it possible for payments to be carried out in emerging economies.

What the Future May Bring

There are no undoubted predictions that can be made about the future of Ripple, but one thing is for sure: it is going to continue to remain a contentious investment. Until things are cleared up about the utility of the Ripple token and more banks verify their use of Ripple, there is going to be a massive volatility.

No security can experience massive highs without also plunging to lows, so any investors looking to make big money on it should be willing to weather prices as low as they are now. The long-term value of XRP will depend on its client base and the likelihood of its adoption. In the short term, Ripple is not expected to undergo any more swings like it had in the last year.

Token supply is an important aspect of Ripple, and they have designed the protocol to withhold 55 billion of the 100 billion supply in escrow. 1 billion tokens are released each month, and this is expected to correlate nicely with the amount of demand being shown for the token. The goal is a level of stability to be reached at the same time as it reaches widespread adoption.

So in conclusion, Ripple is expected to remain very stable in the short run, but in the future might undergo a further price increase if it proves to be a useful partner to the banks it is working with. Banks and other financial institutions are always looking to save money, so if Ripple can deliver on that promise, they will be in a winning position.

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