Ripple (XRP)–While most of the crypto market has benefited from the increased valuation taking place over the last two weeks, XRP has stagnated and failed to rise above 1 USD, a milestone that most analysts have pegged Ripple surpassing in the near-term. The currency is still up over 60% following April’s low of 0.48 USD, but the price remains a far cry from January’s, albeit bloated, all-time high of 3.80 USD. Investors who bought into XRP at January’s high–assuming they have yet to sell at a loss–are still looking at 77% decrease in value on their currency, with XRP likely months away from reaching even half of the last high.
Cryptocurrency is volatile and most investors are aware of the high risk of investing at the outset. However, Ripple has been a top-performing currency throughout the first half of the year in terms of building billion-dollar partnerships, real-world implementation, and leveraging the currency as a replacement to current, financial technology. The MoneyGram and Western Union partnerships with XRP represent the single, largest implementation of cryptocurrency to date, with both companies commanding billion dollar positions in the industry of money transfer. In addition, Ripple has managed partnerships with several high-profile financial institutions, including the Saudi Central Bank and SBI Holdings in Japan. Finally, Ripple was able to capture national headlines by fully funding, to the amount of 29 million USD, all charities related to public education in the United States via Donorschoose.org. The New York Times calculated that Ripple’s impact would directly benefit 1 in 6 school children across the country, further painting a positive picture of the philanthropic efforts by certain individuals and organizations within the industry of cryptocurrency.
With all of this positive press and recent adoption, it’s confusing why the XRP currency has experienced so little pump in way of valuation. Considering other currencies have managed to double or even triple in value since the start of the year, Ripple is down over three-quarters of its valuation since January. Here are a few reasons why XRP’s price continues to lag and what the parent company Ripple can do to help turn things around.
Ripple Overvaluation through Coinbase
Ripple investors have had a tumultuous relationship with coinbase-listing rumors over the last six months. While the majority of the market was convinced that XRP appearing on Coinbase was eminent at the end of 2017, the partnership between the two failed to materialize. Coinbase was still reeling from the debacle of the Bitcoin Cash listing–an incident that led to multiple lawsuits over insider trading against the company–in addition to having a murky “code of ethics” that could potentially inhibit XRP listing.
Coinbase has long been a supporter of Bitcoin and is one of the most user friendly, easy-to-get started platforms for purchasing cryptocurrency available to U.S. and Western customers. However, the company has also instituted a policy of only supporting decentralized products, a footnote that could cause some trepidation through offering XRP. While Ripple’s cryptocurrency is technically decentralized, the parent company behind XRP holds a disproportionate amount of the coins and has large sway over the direction of development–in effect giving the appearance of centralization.
Even without a moralistic barrier to integrating XRP, Coinbase is still wary of new listings following what happened with Bitcoin Cash. Not only were large segments of the user base burned in the fallout (BCH fell from 3900 USD to 2600 in the span of an hour), but the trading platform crashed and took nearly two days to recover. As much as having another currency for users to transact with benefits Coinbase, thereby generating larger fees, the company has declined any attempt to pursue Ripple integration, and has given a subtle indication on multiple occasions that no new currencies are forthcoming. Ripple’s current price may look barren when compared to its early January valuation of 3.80 USD, but most of the market interest was being artificially generated through a Coinbase-listing rumor. The real price of Ripple is more comfortable in the 1.00 – 1.50 USD range, with the current correction inching closer to that valuation.
Lack of Partnerships with XRP as a Transacting Currency
As outlined above, Ripple, the parent company, has done an industry-leading job of establishing partnerships and real-world implementations for the XRP currency. There is a realistic chance that the union with MoneyGram could eventually lead to XRP being utilized for payments, or at least improved efficiency, through a company as large as Walmart. However, the present state of XRP is one sorely lacking in implementation of direct use for Main Street trasnactions.
Ripple may have a foothold in the bank to bank and money wire transfer industries, but has yet to establish a presence as a transacting currency for digital and physical commerce. The former is even more confusing given the top of the industry utility for XRP. Not only are Ripple transaction fees negligible (0.00001 XRP vs. the nearly 4-5 USD for sending BTC), but occur in under five seconds, with the ability for the network to scale to VISA like proportions (25,000+ transactions per second).
Ripple has the functionality to be a ubiquitous cryptocurrency in digital transactions–it just has yet to produce the use case. A blockbuster partnership like Amazon, Walmart or another big-name commerce site could immediately catapult the currency to the top of market capitalization. However, for now, most investors in and outside of Ripple are unenchanted with the growth and adoption through the financial sector. Yes, it’s impressive that Ripple is being used for the Saudi Central Bank. It’s also a substantial mark of acceptance that Western Union and MoneyGram are giving XRP a shot.
But neither of these announcements have made much impact upon the average investor. A person could send XRP anywhere in the world without an intermediate like MoneyGram–and for much cheaper. Ripple has managed to create a currency and technology that is quickly being accepted among the industry of financial technology, but the average joe investor has yet to find the excitement in such a partnership that would lead to exponential increase in valuation. Ripple could change all of that by leveraging the usability of XRP, and making it a direct competitor to Bitcoin in terms of cryptocurrency transactions.