Article by InvestinBlockchain: Jeremy Wall
Since the start of the year, Ripple’s XRP has failed to gain much momentum in terms of price while most other cryptocurrencies have already skyrocketed.
Over the course of 2019, XRP has only increased by 32% while other leading cryptos are up over 100%. For instance, Bitcoin (BTC) is up 135%, Ethereum (ETH) is up 112%, EOS is up 213%, Litecoin (LTC) is up 286%, and most other top cryptos have similar or even bigger returns.
So why is XRP’s price so low while everything around it is pumping? After all, it’s not like XRP is a dead coin with no new developments, adoption, or partnerships.
In fact, XRP has experienced more adoption and usage than it ever has before, with Ripple having over 200 institutional partners under its belt, a massive xCurrent 4.0 upgrade that enables these partners to use XRP, and numerous positive developments and collaborations with Ripple and the world’s financial powers.
Ripple’s influence on the world’s fintech industry is unprecedented and cannot even be compared with any other projects in the blockchain industry.
Yet XRP’s price has yet to reflect Ripple’s multitude of accomplishments. Why is that?
Why XRP’s Price is Low
Ripple has been selling large amounts of XRP to a number of big institutions and companies through Over the Counter (OTC) Trades. What this means is that large institutions are acquiring XRP at a fixed price, which has no positive impact on the price of the token.
A recent example of this type of distribution can be seen in the tweet below.
61,975,000 #XRP (27,603,147 USD) transferred from Ripple to unknown wallet
Tx: https://whale-alert.io/transaction/ripple/E96040A480D857957A33A9FDA54E890CC6306992C947442067B93B03E30C0379 …
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As highlighted above, on May 29, “Whale Alert” notified followers that Ripple transferred over $27 million worth of XRP to an unknown wallet (possibly a large Ripple partner, company, or institution that’s acquiring XRP).
In another instance of Ripple distributing XRP, they transferred nearly $14 million to another unknown wallet which is speculated to be another giant company or institution acquiring XRP. This distribution occurred on the same day as the transfer highlighted above:
31,249,900 #XRP (13,859,395 USD) transferred from Ripple to unknown wallet
Tx: https://whale-alert.io/transaction/ripple/913D0D33565A91AA45C5A65495E68EFBF2CA415A27C79D4D9C44E59814624730 …
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In addition to the large transfers showcased in the tweets above, Ripple also made 12 consecutive transfers of the same amount, nearly $3.5 million worth of XRP, to unknown wallets on the same day, May 29.
1 of these 12 transfers is shown in the tweet below:
7,812,400 #XRP (3,479,578 USD) transferred from Ripple to unknown wallet
Tx: https://whale-alert.io/transaction/ripple/2E18A75AEDCE7E4EAA7AB8932CCC455D46A695E239E6D1C7DF4AF6E5B66424F5 …
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In total, on May 29 Ripple distributed nearly $84 million worth of XRP to 14 different unknown wallets, which are speculated to be Ripple partners or companies and institutions acquiring significant amounts of XRP in OTC deals.
While the distribution of this XRP does not positively impact the token’s price due to fixed rates in OTC trades, this distribution significantly increases liquidity and is healthy for XRP’s future.
Is Ripple Suppressing XRP’s Price To Expand the Ecosystem?
It’s been speculated among people in the crypto space that Ripple may be suppressing the price of XRP in an effort to expand the XRP ecosystem and fairly distribute tokens.
For instance, giant institutional players buying XRP must do so through a contract with Ripple at a specified price. This is what entices them to load up on XRP when the price is low, allowing for far better distribution across institutional clients around the world.
If Ripple allowed these clients to purchase XRP on the open retail markets, the price of XRP would climb too high too fast and not as many partners and institutions would be able to participate and acquire the number of tokens they need.
Therefore, Ripple might be distributing XRP across all of their partners and institutions, suppressing the price of XRP by selling it at fixed rates OTC. This then allows XRP to be vastly more distributed, and the entire Ripple ecosystem benefits as a result.
Once Ripple feels that XRP has been fairly distributed via OTC to institutions and to those who need it, then Ripple can get the ecosystem going by dissolving the contract terms and forcing additional players to buy XRP through the open market.
Only then might the price of XRP reflect all of the positive developments that have happened thus far. However, the cryptocurrency market is full of surprises, and there may be other reasons for XRP to increase in price too.
All in all, it’s clear that Ripple’s goal and focus is on building the ecosystem up and distributing their XRP tokens.
Therefore, one could speculate that now is the time to be accumulating XRP, as the price will not stay this low forever.