Ripple is one of the innovative financial technology companies in the cryptocurrency world, offering a powerful payment settlement system, fast transaction speeds and fees. Like most blockchain-based companies, Ripple has its native cryptocurrency called XRP.
Over the years, this cryptocurrency has gained massive adoption, thus driving its price to the moon. Some crypto enthusiasts even consider it an alternative to Bitcoin (BTC). However, it recently saw an exponential decline, as with all other cryptocurrencies. The excellent part about XRP is that it has maintained a firm position in terms of market capitalization, making it one of the most valued coins in the market. As of the time of writing, XRP ranked in the market as the 6th largest coin, with a market capitalization of approximately 23 billion.
The prices of most instruments or assets in the financial and crypto markets tend to react to fundamentals based on investors' actions. As a result, such instances play a role in shaping the price of an instrument.
What Could Drive Ripple's (XRP) Potential Growth?
1. Increased institutional adoption
Over the years, Ripple's blockchain network has consistently gained more adoption among major banks and payment providers to address commercial issues like real-time remittances, international P2P payments, e-invoicing, international supply chain payments etc. Thanks to its fast (nearly 1500 transactions per second) and low-cost global transactions. So far, RippleNet has over 100 members worldwide who include various financial players like:
- Canadian Imperial Bank of Commerce
- InstaRem
- TransferGo
- PNC Bank (USA)
- Siam Commercial Bank (Thailand)
- Standard Chartered Bank (UK)
- Cuallix
- Induslnd
- RAKBANK
- SBI Remit
With the increased adoption of Ripple's blockchain solutions, you'll likely see increased XRP coin usage. Additionally, it could boost its value driving the price to significant levels over time.
2. Expansion into other markets
While most people know Ripple for offering excellent cross-border payment solutions through RippleNet, this blockchain startup looks to expand into other markets like e-commerce lending, remittances and micropayments. Since 2020, Ripple has aimed to add more products and developments, such as offering loans to its customers. Also, on April 2023, Ripple partnered with Ecwid, a leading e-commerce platform. Amazon has also been Ripple's vital partner in the same space.
Recently on May 17th 2023, Ripple acquired Metaco, a Swiss crypto custody services company. More importantly, Ripple is actively attempting to expand its business outside of the US and targeting to scale up in the European Union and other regions around the world.
Ripple's expansion strategies and developments could stimulate XRP's demand, ultimately raising its price.
3. Technological improvements
Historically, technological advancements have impacted XRP price. As the Ripple team continues to upgrade its network, products and the underlying technology behind XRP to improve transaction speeds, cost and security, XRP could become more valuable and prominent, thus enhancing its utility. Consequently, it could positively impact its price.
4. Addition to more cryptocurrency exchange
Often, if a cryptocurrency is listed on more exchanges, it attracts more investors willing to buy and trade it due to the increased demand. As a result, the price of a cryptocurrency also increases. Suppose XRP is listed on major exchanges or added as a base currency on more exchanges; it would allow more people to buy and trade XRPUSD, resulting in increased volume and liquidity. Eventually, XRP price will rise.
5. Regulatory developments
As seen in the past few years, regulatory developments in the crypto market impact cryptocurrencies like XRP. If, in future, the regulatory framework in most regions like the USA, European Union and Asia is clear with minimal restrictions or scrutiny, you're likely to see XRP's adoption rate increase, and so will its price.
What Factors Affect or Influence XRP's Price?
1. Speculation
Much of the price action seen on the XRP's price results from investors speculating on future price movements. When the speculation is positive, XRP price tends to go high because many investors are in the market to catch the uptrend. However, negative speculation often causes some investors to exit the market, thus causing a drop in the price. Generally, investors' sentiments towards XRP are a crucial factor that shapes XRP price movements, as seen in the past.
2. XRP News
News and announcements from Ripple strongly influence XRP's price positively or negatively depending on how the market perceives the news. Additionally, news from mainstream media and engaging social media feeds related to XRP or the general crypto market have proven to affect XRP price.
For instance, negative Twitter feeds about XRP with significant engagement, especially from influential persons, could cause the price to drop. Also, when Ripple announces a major partnership deal or a new development, it tends to boost XRP price.
3. Bitcoin performance
Often, most cryptocurrencies follow BTC's price trends, and it's the same for XRP. You're probably wondering why that is the case. First, traders view Bitcoin as an indicator of the overall crypto market. Second, BTC is the largest cryptocurrency by market cap; thus, its price action easily affects the value of other cryptocurrencies with a lower market cap.
When BTC is on a strong uptrend or downtrend, XRP is affected in a similar way and tends to follow a similar direction.
4. Ripple quarterly reports
Ripple's quarterly reports provide transparency into the company's key metrics and progress. Suppose the report depicts substantial growth numbers in significant areas such as network volume, institutional adoption and market cap; you're more likely to see a price rise on XRP and vice versa.
5. Financial events
Financial events, especially macroeconomic events, have shown significance in shaping the price of cryptocurrencies.
Usually, when the global economy is doing well and expanding, people have more money to invest in financial assets like cryptocurrencies. Now, because of the great demand for assets, prices usually rise. On the other hand, when the global economy is in a dip, people are forced to use more money for immediate consumption. Consequently, there is minimal investment in assets, and more investors exit the market, thus causing prices to fall.
A good example is what has been experienced since 2022 when the global economy was hurting, and it subsequently contributed to a sharp fall in the crypto market.
6. Supply and demand
Another technical yet vital factor affecting XRP's price is the principle of supply and demand. Suppose there is an increased demand for XRP coin in the market; it would easily cause its price to go up, bearing in mind XRP has a maximum total supply is 100 billion tokens. Conversely, a minimal demand for XRP crypto with increased supply could only lead to its price dropping.
What are the Key Metrics Should You Monitor to Evaluate XRP's Price?
As an investor or trader, you depend on price action to make some of the decisions regarding your investment. Here are five significant metrics you should monitor to determine the price of XRP:
1. XRP circulating supply
Circulating supply metrics is crucial as it show the number of tokens available to investors. More importantly, it helps determine the issuance or distribution of tokens of XRP tokens in the market. Suppose there is limited supply and demand is high or vice versa, which ultimately affects XRP price.
2. XRP market capitalization
Monitoring XRP's circulating supply automatically requires you to monitor its market capitalization (the total value of cryptocurrency in supply). It gives you an overall view of the XRP's worth in the market compared to its competitors in the market.
Usually, a rising market cap indicates that XRP is increasing in value and popularity. It means investors have a positive view of XRP and are willing to buy it.
3. XRP daily trading volume
Daily trading volume is a critical metric for measuring the overall strength and potential of XRP. What is trading volume anyway? It refers to how much (n monetary terms) XRP or a given cryptocurrency has traded over a period of time.
Why does it matter? Higher trading volumes for XRP show increased activity and interest, which can positively impact XRP price over time. Also, the consistent daily trading volume suggests a stable liquidity of XRP or the beginning of a strong trend in the market. On the other hand, a declining volume tends to affect XRP price negatively.
4. RippleNet network statistics
Traders and investors ought to keep an eye on regular statistics on the growth of RippleNet, like network, volume, number of members etc. RippleNet's ability to utilize blockchain technology as a global payment system makes it a unique and on-demand solution to major financial institutions and payment processors. As a result, its growth tends to affect XRP's adoption and price. For instance, RippleNets' growth and improvements would easily support increased use cases for XRP.
5. Number of xRapid partners
xRapid is another Ripple product offering liquidity solutions to banks that use XRP coins to facilitate cross-border payments using Ripple's system. An increasing number of partners who used xRapid would easily lead to the increased utility of XRP coins. As a result, it would show increased global adoption of XRP, which is good for its price.
Summary
Like most cryptocurrencies, XRP's price has been up and down, driven by different factors. Fundamental factors like investors' speculation, news and financial events have shaped XRP's price. Notably, Ripple's increased adoption, technological improvements, and moves to expand into other markets pose a potential for its growth. XRP would also see a significant price rise.
Suppose you want to invest in XRP like XRP USD CFD trading; you need to regularly monitor metrics such as XRP's daily trading volume, circulating supply, market capitalization and Ripple's developments. They will help you forecast how XRP price will likely perform over time. Therefore, you can capitalize on those price differences as soon as it occurs in the market.
