Bitcoin’s recent surge has dominated public attention the past few weeks;, however, on the 23rd of August, the XRP price also experienced a spike in value, raising its market cap to $11.2bn from $6.6bn the previous day. The cryptocurrency’s total capitalisation subsequently settled down before bumping up again on the 29th. It is holding steady around $8.4bn at the time of publication.
Three Reasons the XRP Price Increased
Firstly, Ripple (the company behind the cryptocurrency) is benefitting from XRP’s adoption amongst big banks who are taking advantage of its fast transaction speed and secure network. This allows for effective intra-bank trading as financial institutions are finally able to escape the limitations of the current outdated infrastructure. Ripple has also admitted that they have sold their currency to established banks at a discount to encourage them to become market makers and confer greater legitimacy to the project.
Secondly, Ripple recently met with a group of bankers, academics and industry influencers to both discuss the cryptocurrency’s future and encourage cooperation between China and the US when it comes to the development of digital currencies. Shortly after the news, XRP’s price enjoyed its second bump in value. This is hardly a surprise – as more respected individuals associate themselves with the project, the subsequent increase in credibility is matched by an increase in value. Ripple is unashamedly aware of this and is known for stimulating credibility to fuel XRP’s valuation. For instance, the company recently invited Anja Manuel (an official from the US State Department) to their board of directors to provide support for their upcoming expansion into China. As a further example, Ripple has announced they will be holding a mid-October event in Toronto and will feature guests like Sir Tim Berners-Lee and Dr Ben Bernanke. When you get the father of the World Wide Web and an ex-chairman of the Fed in the same room, people start to pay attention.
Thirdly, an enormous amount of XRP trading occurs in Korea. 40% of all global trading volume in the past few weeks occurred between XRP and KRW (South Korean Won), suggesting that sentiment in the Asian markets played a big part in the cryptocurrency’s price spike. This is supported by an overall hike in crypto prices last week after the jitters caused by North Korea’s recent missile launch pumped the value of altcoins before investors flipped the coins for a quick return.
If the past few weeks have shown us anything beyond the fact that predicting the value of cryptocurrencies is becoming increasingly complex, it’s that credibility should not be underestimated. While Bitcoin has always had the first mover advantage, the currency’s recent and potential forks may push investors to move their funds towards a more reliable cryptocurrency. Ripple will undoubtedly ensure that XRP is perfectly placed to fill that demand.