Ripple's XRP: 5 Reasons the Asset’s Value is Shaky After Rebranding
The XRP digital asset is spreading in popularity, but there are red flags that its promises may be overblown.
In the past days, more reminders appeared that the Ripple company, and the Ripple upcoming payment systems will have nothing to do with the XRP digital asset, which is vigorously traded on exchanges. The newly renamed XRP asset, shedding the Ripple identity, is creating some doubts for traders and longer-term investors.
XRP, which recently returned briefly above $0.50, then slid to $0.48, is being marketed as the crypto coin of the future. But there are warnings that its value may not go to outlandish levels, and that the use of XRP coins will be totally independent from the performance of the Ripple company.
Below are 5 common arguments against XRP that should invite more caution.
XRP is not being spent: the Ripple company is very active in giving away XRP coins to spend, including to high-profile individuals like Ashton Kutcher. However, spending XRP, or using it as a carrier of cross-border value, has not materialized at the expected rate. Additionally, banks and institutions are receiving grants and giveaways of XRP coins, and not acquiring them on the open market.
XRP was just a giveaway: a recently unearthed Bitcointalk thread was used to show that the XRP asset was just an addition to the Ripple ecosystem. Since then, the two were conflated, creating the expectation that the success and usage of the Ripple ecosystem would lift demand for the asset.
But now it looks like XRP is being marketed, while not being essential to interbank payments.
XRP loses Coinbase: XRP will probably not see mass adoption through Coinbase, although rumors and possibilities are still thrown around. Without the widespread adoption, and a touch of buying mania and new inflows of cash, XRP may still lag in price.
XRP awaits a verdict on being a security: the XRP digital asset is expecting an estimation whether it fits the criteria for being a security. This may spell trouble for the agility and accessibility of the asset - and makes everyone involved in the ecosystem more cautious.
The uncertainty may depress the price of XRP, but there is optimism in case the verdict shows the asset is not a security. At that point, US-based buyers may become buyers.
Others believe a verdict at the beginning of August, presenting XRP as a security, would actually make crypto holders dump the asset, and sell it to Wall Street investors, who would be happy and capable of owning the asset.
In any case, many are cautious that XRP and Ripple are too visible, and are awaiting clarity on their regulatory status.
XRP remains confusing: the Ripple project offers a lot of technological improvements, primarily the Xrapid payment system. However, projects like Codius utilize the XRP asset, creating utility by harnessing it as a form of payment for smart contracts.
But the marketing and impression of XRP as a coin for spending is confusing. Is XRP trying to be the internet money, a currency, or a utility coin like Ethereum? So far, the news and updates are only leading to more market speculations.
Despite the social media hype, and despite XRP coming up a winner on Twitter polls, the asset is thinly traded, as lack of certainty and enthusiasm continues. Volumes have fallen to $300 million in 24 hours, and speculation happens through an inflow of Tether (USDT), making more than a third of the daily volumes.
With that level of uncertainty, XRP is a wait-and-see proposition right now, especially given the very tentative market recovery.