5 Factors that Influence Ripple’s (XRP) Price

By August 19, 2020March 28th, 20224 minute read
5 Factors that Influence Ripple's (XRP) Price

Ripple’s cryptocurrency token XRP has performed quite well since the beginning of the year. As crypto markets swelled to gain back last year’s highs, the XRPUSD pair posted almost a 70 percent growth YTD.

It is important to remember that XRP as a cryptocurrency works on the XRP Ledger. The digital asset and the blockchain is independent of Ripple’s control.

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However, XRP powers transactions on RippleNet, the firm’s native cross-border payments network. Also, it is the primary fuel behind Ripple’s On-Demand Liquidity Service.

Therefore, news and happenings around the San Francisco based company dictate XRP’s price. Apart from that, the market value and exchange rate of Ripple’s token depends on a host of other factors.

Overall Crypto Market Sentiment

Generally, bitcoin’s price moves serve as the benchmark to gauge the market sentiment for cryptocurrency traders and investors. When BTC goes up, prices of other crypto assets also appreciate, and vice versa.

XRP’s price correlation to BTC is no different, as can be seen from the charts below:

BTCUSD YTD Chart
BTCUSD YTD Chart, Source: CoinMarketCap
XRP's price correlation to BTC
XRPUSD YTD Chart, Source: CoinMarketCap

When the price of bitcoin goes up, people who think BTC is less affordable turn to XRP for exposing themselves to the cryptocurrency market action. This affects the token’s price.

News

When Ripple showed up in Fortune’s magazine’s best places to work in the Bay Area in January this year, XRP price responded with an uptick.

Also when the news came out about Ripple entering the Inc magazine‘s list of the world’s 5000 fastest-growing companies, XRPUSD price responded positively.

In another instance, Ripple (XRP) price trended upwards, when Asheesh Birla, SVP of Product & Corporate Development at Ripple took to Twitter to hint at an impending IPO for the company.

Apart from the above, general cryptocurrency market and industry news also has an impact on the price of XRP.

Take for example the news of banks in the United States allowed providing custody services for cryptocurrencies and a federal US Court declaring bitcoin as money. These two events took place on July 22 and July 24, and the effect on XRP’s price can be seen in the chart below:

XRPUSD Chart July 2020- August 2020
XRPUSD Chart July 2020- August 2020, Source: TradingView

Custody and Listing Updates

Recently, the New York State Department of Financial Services (DFS) approved Ripple’s XRP token for custody by companies but not for listings. This showed up on the price charts as the token dipped following the news.

On the contrary, the listing of XRP options contracts on the world’s biggest cryptocurrency exchange Binance sent it flying over the next consecutive days.

Increased Whale Activity

As per on-chain analysis and metrics provider Santiment, XRP whales increased by 3.7 percent as of July 31, 2020. Whales are folks who hold large amounts of cryptocurrency to make deep profits from the asset’s volatile price movements.

XRP Holder Distribution vs. Price
XRP Holder Distribution vs. Price. Source: Santiment

Statistics show that bigshot investors hold anywhere between 1 million to 10 million coins, and this in turn has pushed XRP’s price upwards since then, as can be seen from the chart above.

After trading in a sideways trend for this whale activity boosted XRP’s price by around 30 percent. And this not the first time. Whales have always played a significant role in XRP’s price movements across charts. According to a report most of them are based in South Korea and Malta.

Adoption: OTC XRP Sales

As mentioned above, XRP is meant to function as an auxiliary asset for Ripple’s On-Demand Liquidity (ODL) service. ODL helps financial institutions and payment companies process cross-border transfers much faster than the usual conventional approach.

Ripple’s quarterly reports (especially this year) point to a rising trend in ODL adoption. For instance, in Q2 2020, over-the-counter (OTC) institutional sales of XRP jumped 1700% as compared to Q1 2020.

What this means is that commercial firms bought more XRP to process their global monetary transactions. This is one of the primary objectives of Ripple as a company.

Even if this didn’t contribute to significant price movements for Ripple’s token, it did instill the market’s confidence in XRP.

These were some of the factors that have a direct influence on the price of Ripple’ native cryptocurrency token XRP. If you know any more such factors the have an effect on XRP’s price, let us know in the comments below!

To know how to buy XRP from WazirX check out our official blog article describing the process of the same.

To keep you updated, you can also download the cryptocurrency exchange app

Further Reading:

Bitcoin Cash Price Prediction: How much is it worth in 2021?

Ethereum price prediction: Will it hit $5000 in 2021?

Dogecoin Price Prediction 2021 : How much is it worth in 2021?

5 Critical Bitcoin Price Prediction For 2021

Digibyte Price Prediction : What’s in store for us?

TRON Price Prediction: How much is it worth in 2021?

Zilliqa Price Prediction: How will it perform in 2021?

What Is Cryptocurrency?

A cryptocurrency is a digital currency secured by encryption, due to which chances of activities such as counterfeiting and double-spending taking place get close to impossible. Cryptocurrencies get created on blockchain technology ( a distributed ledger enforced by a distributed network of computers). Cryptocurrencies are unique in that they do not get issued by any central authority. The term "cryptocurrency" comes from the encryption techniques used to keep digital currencies and the network safe.

Is Cryptocurrency Safe To Invest In?

Cryptocurrency investments are subject to market risks, but if sufficient security measures are not taken, trading accounts can be maliciously accessed. Investments come with risks and uncertainties, and we cannot claim that any digital currency investment is risk-free. Buying and selling cryptocurrencies can be risky even if the trader is knowledgeable about the market and treats their coins carefully.

Are Cryptocurrencies Legal In India?

In India, cryptocurrency is legal, and anyone can buy, sell, and trade it. Because India lacks a regulatory system to regulate its operations, it is presently uncontrolled. According to the Ministry of Corporate Affairs, companies must now document their crypto trading/investments inside the financial year.

Is Pi Cryptocurrency Safe?

Pi Network (PI) is the newest digital token to catch the cryptocurrency community's interest, even before it has wholly debuted. Some users see it as a chance to get engaged in a cryptocurrency from the beginning and profit in the future, similar to how early Bitcoin adopters made huge profits by mining and keeping the coin. Other users have compared Pi to a worthless multi-level marketing (MLM) scheme.

Who Invented Cryptocurrency?

Satoshi Nakamoto invented cryptocurrencies and the technology that makes them function in 2009. The presumed pseudonymous individual or persons who invented Bitcoin used this identity. In addition, Nakamoto created the first blockchain database. Even though many people have claimed to be Satoshi Nakamoto, the person's identity remains unknown.

Is Cryptocurrency Banned In India?

No, cryptocurrency is not banned in India. India has seen its ups and downs in the crypto sector concerning its legal status. The Reserve Bank of India (RBI) issued a circular in April 2018 advising all organizations under its jurisdiction not to trade in virtual currencies or provide services to assist anyone in dealing with or settling them. A government committee proposed outlawing all private cryptocurrencies in mid-2019, with up to ten years in prison and severe penalties for anyone dealing in digital currency. The Supreme Court overruled the RBI's circular in March 2020, allowing banks to undertake cryptocurrency transactions from dealers and exchanges.

Is Crypto Legal In India?

Cryptocurrencies are legal in India, and anyone can purchase, sell, and exchange them. It is currently uncontrolled, as India lacks a regulatory structure to oversee its operations. Per the Ministry of Corporate Affairs, companies must now record their crypto trading/investments within the financial year. In cases where a person receiving the gains is an Indian tax resident, or the cryptocurrency is regarded as domiciled in India, cryptocurrency transactions have been taxable in India

How To Invest In Cryptocurrency?

There are two ways of investing in cryptocurrency, mining and via exchanges. Cryptocurrency mining is considered the procedure of verifying and adding transactions to the blockchain public ledger. Another option is via cryptocurrency exchanges. Exchanges generate money by collecting transaction fees, but there are alternative websites where you can interact directly with other users who want to trade cryptocurrencies.

How Many Cryptocurrencies Are There?

There are over 5000 other digital currencies available on the internet in addition to Bitcoins. The only problem is that they haven't gotten the users' attention. Besides Bitcoins, a few other digital currencies have gained popularity among users. It's been more than ten years since Bitcoins were first released, and now they've achieved new heights thanks to their phenomenal success.

What Is The Safest Cryptocurrency To Invest In?

Bitcoin has had the highest market capitalization, has been around the longest, has the most experienced development team, and has enormous network impact and brand recognition. As a result, while trading cryptocurrencies, the rate of return on Bitcoin is commonly used as a benchmark. However, the risks associated with cryptocurrencies remain, and the safest cryptocurrency for you depends on your analysis.

Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
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