XRP Surges Nearly 40% Amidst Warnings of a "Huge Dump"

  • Ripple's XRP has surged nearly 40% in the past 24 hours.
  • The XRP price is being driven mainly by speculation as its financial products have yet to deliver. 

San Francisco-based Ripple Lab, Inc.’s XRP token has surged over 40% in the past 24 hours and is currently trading at $0.5305 according to data from CryptoCompare. As covered on CryptoGlobe, the XRP price increased by 13% on September 20th.

hour_CryptoCompare_Index_XRP_BTC_337_11537533489522.pngXRP 24-Hour Price Chart via CryptoCompare

There are several possible reasons, or factors, which may have contributed to the significant increase in the cryptocurrency’s price. As pointed out by the Ripple company’s chief technical officer, David Schwartz, there’s a supportive ecosystem being developed around the American firm’s suite of financial products.

Web Monetization With XRP

Schwartz mentioned that another San Francisco-based startup, Coil, is “testing their web monetization flat rate product out on Wikipedia with XRP.” As described on Coil’s official website, users have to sign up through their website and then pay a fixed monthly subscription fee.

Somewhat similar to how the Brave browser aims to integrate payments with Basic Attention Token (BAT), when Coil’s registered users visit a “supported website”, the company donates a certain amount of the users’ deposited XRP to the website’s creator “on their behalf.”

According to a Medium post by Stefan Thomas, the founder of Coil, his platform will introduce a more effective monetization system, so that content creators are fairly compensated for their work.

"Exaggerated" Market Reaction

Despite this seemingly positive development for the XRP token, many have argued why people would want to start paying for content on the internet, considering most services and information sources are free to use.

It appears the market’s reaction may be “exaggerated”, as noted by Tim Enneking, the managing director at Crypto Asset Management. Moreover, Ripple’s xRapid product, which is reportedly designed to reduce the transaction costs associated with cross-border transactions, has not even been launched yet.

As covered on CryptoGlobe, the Ripple company recently partnered with the PNC Financial Services Group, one of the largest banks in the US. Notably, PNC has also joined RippleNet, a decentralized global network of banks and payment providers, and is reportedly planning to use Ripple’s xCurrent in production.

Exchanges "Pumping", "Huge Dump" In October

As described on Ripple’s official website, xCurrent aims to be “an enterprise software solution that enables banks to instantly settle cross-border payments with end-to-end tracking.” Other financial institutions that have started using Ripple’s suite of products include Saudi Arabia’s National Commercial Bank (NCB).

However, at this point, all of Ripple’s financial products are in their early stages of development and adoption. So, it seems traders and investors are overreacting to Ripple’s recent announcements.

Commenting about the surging XRP token, twitter user XRPcryptowolf warned there might be “a huge dump” in October. He also claimed that cryptocurrency exchanges were mainly responsible for “pumping” XRP’s price, as they may consider Ripple’s partnership with PNC and the upcoming (annual) Ripple SWELL conference as “good news.”

Other seemingly positive developments for Ripple include its chief marketing strategist, Cory Johnson, announcing that the American fintech firm will partner with crypto exchange Bittrex, Bitso, and Philippine-based Coins.ph to conduct cross-border payments with xRapid.

$5 Trillion Foreign Exchange Market

As noted by several crypto market analysts, it’s largely “speculation” and “rumors” that are driving not only the XRP price, but also most other digital currencies. Twitter user Rachel Lee seemed to have jumped to a hasty, and maybe a far-fetched, conclusion that “Ripple was strategically targeting specific corridors which aligned with [the] $5 trillion a day Foreign Exchange market.”

While Ripple may actually have “working products”, according to a recent research report by InvestInBlockchain, these cross-border payment solutions are nowhere near mainstream adoption like services such as PayPal.

Whether or not Ripple’s financial technology will be effective in the long-term remains to be seen. The level of competition now in the crypto industry has also reached new heights, as Stellar (XLM), a 2014 fork of the Ripple protocol, also aims to provide an international payments solutions.

How Bakkt Can Bring the Crypto Space an Institutional Investor Influx

Cryptocurrency enthusiasts have for years been waiting for institutional investors to enter the space. While the introduction of bitcoin futures contracts on regulated exchanges in late 2017 didn’t gain a lot of traction, but Bakkt may.

Bakkt is a long-awaited bitcoin futures exchange and on-boarding platform from the Intercontinental Exchange (ICE) - the parent company of the New York Stock Exchange – and it’s set to launch this year. Bakkt itself has remained tight-lipped over the precise launch date after delaying its launch last year, with ICE CEO Jeff Sprecher in February simply saying “later this year.”

It’s possible that this quarter may see the launch or at least more news about when the exchange is finally coming. At the end of March, Bakkt CEO Kelly Loeffler explained:

While we’re not yet able to provide a launch date, we’re making solid progress in bringing the first physical delivery price discovery contracts for bitcoin to the U.S.

Bakkt’s launch could be a major milestone for the cryptoasset industry. A venture backed by Microsoft and Starbucks, its institutional pedigree alone will switch many cautious investors on. Specifically, the firm is set to help consumers pay for goods and services with cryptocurrencies, with Starbucks being the flagship retailer in its arsenal.

Bakkt’s Bitcoin futures contracts will be the first physically-settled derivatives on a regulated trading platform. This means investors will receive the contract’s underlying asset, bitcoin, when it expires.

Currently the Chicago Mercantile Exchange (CME) offers cash-settled bitcoin futures contracts, meaning investors get the equivalent of BTC’s value in fiat when the contracts expire. This is seen by some as a major development in the cryptocurrency space, as it shows traditional finance is willing to interact with the nascent cryptoasset industry.

It’s worth noting that earlier this year the ICE’s CEO called Bakkt a “bit of a moonshot bet,”  as it was organized in a way “very different than the way ICE typically does business.” The firm has its own offices and management team, and could undergo more rounds of financing in the future.

Bakkt And a Potential Bitcoin ETF

What’s significant about Bakkt’s launch beyond this, is that it may bolster the chances of a Bitcoin Exchange-Traded fund (ETF) being approved. Such a product would make it easier for institutional investors to gain exposure to cryptocurrencies.

In August, the US Securities and Exchange Commission (SEC) rejected nine other ETF applications, in particular highlighting how those applying hadn’t provided evidence that “bitcoin futures markets are of significant size’” for an ETF to be launched.

Once Bakkt is launched its trading volumes may very well help quell the SEC’s concerns over the bitcoin futures markets’ small size as institutions and other investors may feel comfortable entering it. Larger futures contracts trading volume, increased liquidity and a well-established company involved may prove enough to convince the SEC that the time is right for a Bitcoin ETF.

Bakkt therefore represents a very significant milestone for a maturing cryptoasset industry and may well herald the “institutional influx” that many have been anticipating since 2017. Despite the markets remaining relatively flat throughout 2019 these looming decisions in the U.S. have the power to move the entire industry forward, for better or worse.