“It’s basically like a Bitcoin but for like banks or something right?”
The above statement is generally the extent of how much many cryptocurrency investors know about Ripple. For having the third highest market cap, many people still know surprisingly little about Ripple XRP or the potentially industry-shaking business that is Ripple.
If you find yourself in this category, don’t fret. You’re not alone, nor is understanding what Ripple does too far out of reach.
When it comes to exciting cryptocurrencies, the average investor is usually drawn to volatility. A sudden atmospheric surge in price for a random altcoin usually makes headlines, regardless of how viable an investment target that coin is.
Whereas some coins such as Monero and NEO multiplied in price, Ripple stayed relatively quiet. It still held onto being in the top 5 most popular coins, but it was just not exciting to watch. This led a lot of people to forget, or otherwise neglect to understand, what Ripple is trying to accomplish.
The opportunity Ripple is trying to seize is based on the inefficiency of the current global payment industry. The world sends roughly $155 trillion across borders, and this $155,000,000,000,000 (that’s a lot of zeros) is chipped away at with high fees and lengthy processing times. If you’ve seen a chunk of your payment from an international client go missing to fees, multiply that to an almost incomprehensible amount of money.
The recent and unexpected spike in price signaled a bull-run in a time where altcoins were generally down double-digit percentages.
The reason XRP saw some growth in October is largely due to the belief that Ripple is going to make a big announcement at their upcoming conference in Toronto called “Swell”. Traders are buying into XRP with the hope that the price will continue to grow after the conference. If anything, this should be a red flag. Anticipation has already been built into the current price, and if the conference is underwhelming, we’ll likely see a drop in price.
Other than the conference, Ripple has been expanding into Asia by opening offices in India and Singapore. Additionally, Ripple announced that RippleNet (their enterprise blockchain network) added its 100th member.
Is Ripple a Good Investment Target?
And so we arrive at the point that any keen investor has been asking themselves since the beginning of the article.
It’s important to emphasize that I am only providing you with information to help your decision and not financial advice.
In a recent AMA on Quora Sessions, the CEO of Ripple, Brad Garlinghouse, touched on why one should invest in Ripple:
“First a clarification on the question: Ripple is a private, cash flow positive company and we don’t have any plans to raise additional capital
As a general rule I try not to give investment advice, but I’m happy to give a summary of what drives Ripple’s and XRP’s value. Ripple is focused on enabling a global network of financial institutions to use our software to create what we call the the Internet of Value. Our goal is to lower the marginal cost of international payments to the point where money can move as easily as information does today.
As the network grows and adoption of Ripple’s products increases, the value of Ripple should grow as well.
As this occurs, the demand for XRP will increase and markets will reflect that.”
That being said, while Ripple is attempting to tackle an enormous problem and is perhaps the best-suited company to do so, there are some major drawbacks (in my humble opinion) investing in it for the long-term.
- Ripple (XRP) is not decentralized. Ripple, the holding company, owns about 61% or $16 billion worth of all the XRP. This means that they can release their XRP to have some control on prices. Since they have an enormous holding supply, this would only make the price go down unless they choose to buy XRP tokens back, which they haven’t shown any intentions to do.
- Ripple is all about low payment fees. That’s their edge over the current global payment system. It’s not in their best interest for XRP tokens to be worth a lot since that would increase the cost per transaction. Bad news if you’re looking for massive gains.
- There are 38,600,451,446 XRP in circulation, with a market cap of $9,983,659,362. There is also currently a maximum supply set of 100,000,000,000 XRP. The sheer supply curbs the growth potential. We’re likely not going to see a single XRP token follow a similar growth pattern of a NEO token (currently trading at $29.51).
- Ripple is one of the few companies in the cryptocurrency world that is making money and is working with actual clients. It’s pretty much an anomaly in a market full of tokens with only a whitepaper to their name.
- The global payments industry is worth trillions.
- The reason many big banks will have a lot of difficulty making their own Ripple spin-off is because they’re inherently self-serving and centralized. For example, Banko Alex has no incentive to adopt the primary usage of a Banko Moskov coin. These banks are stuck in a conundrum in having to create a decentralized coin while still maintaining control. Ripple serves as an objective third party intermediary that has only one primary objective: to facilitate global payments and earn revenue in doing so.
For me, Ripple has always been an interesting coin to watch. My interest is largely fueled by a frustration with the archaic global payments industry, and that aligns me with Ripple’s opportunity.
A few questions you should be able to answer prior to investing in any cryptocurrency include:
- What problems are they solving?
- Are they building something useful?
- What is their industry like (size, competitors, etc)?
- Do they have a competitive edge?
- What’s their founding team’s experience?
- How many tokens are released, or plan to release in the future?
If you’re interested in Ripple, I highly recommend following their three-day conference Swell. Two of their keynote speakers include Ben Bernanke, the former chairman of the U.S. Federal Reserve System, and Tim Berners-Lee, inventor of the World Wide Web. There’s a reason so many people are awaiting the conference with anticipation, and it’s largely to hear what these two speakers think about the current state of Ripple and the blockchain world.
As far as investing, that decision is up to you. Either way, Ripple will be an interesting story to follow.
Bitcoin Returns to Health After Flash Crash
The value of bitcoin stabilized Thursday after a flash crash wiped nearly 9% from its value, a sign that investors are getting over the initial fear of regulatory encroachment on their tokens.
Bitcoin’s Epic Drop
Beginning at around 12:45 UTC, the BTC/USD began an epic decline that continued for 90 minutes until prices bottomed in the low $5,100 region. At its worst, bitcoin was down nearly 9% on the day.
Prices would soon recover, and do so in a big way. BTC/USD regained more than $300 over the next two hours before continuing higher for the rest of the day. At press time, bitcoin is up 1.3% at $5,646, having traded within a $180 range early Thursday.
At present values, bitcoin is capitalized at $94 billion, according to CoinMarketCap. The token peaked above $97 billion last week as it set multiple record highs.
Bitcoin continues to trade in overbought territory, according to the Relative Strength Index (RSI). As the following chart illustrates, the BTC/USD has been technically overbought on several occasions over the past six months.
As CCN reports, bitcoin wasn’t the only digital currency to experience a sharp drop. Ripple plunged by 12% and Ethereum shed 8%. For bitcoin and ether, the losses would later prove to be a healthy correction after last week’s run-up. The ETH/USD is currently trading around $314.
Ripple is still down roughly 9%, where it is trading near three-week lows.
Bitcoin, ether and Ripple are the world’s top-three digital currencies by market cap. Combined, they’re worth more than $131 billion.
Regulatory Fears Emerge
The plunge came just a day after the U.S. Commodity Futures Trading Commission said it has jurisdiction to regulate bitcoin derivatives. In a report titled A CFTC Primer on Virtual Currencies, analysts at the Commission reaffirmed that bitcoin and others like it are commodities.
The report said:
The CFTC’s jurisdiction is implicated when a virtual currency is used in a derivatives contract, or if there is fraud or manipulation involving a virtual currency traded in interstate commerce.
A commodity is defined in various ways by the CFTC. It can be a physical commodity or natural resource, a currency or interest rate and “services, rights, and interests… in which contracts for future delivery are presently or in the future dealt in.”
Three bitcoin exchanges were listed as examples of permitted cryptocurrency activity. They included TeraExchange, LLC, North American Derivatives Inc. (NADEX) and LedgerX, LLC.
The report also said there was no inconsistency between how it defines cryptocurrency and how the Securities and Exchange Commission (SEC) dealt with The DAO. SEC regulators deemed The DAO tokens to be “securities” under federal law.
There is no inconsistency between the SEC’s analysis and the CFTC’s determination that virtual currencies are commodities and that virtual tokens may be commodities or derivatives contracts depending on the particular facts and circumstances. (CFTC)
As cryptocurrency trading expands in scope, investors can expect a slew of products designed to track the market. The Chicago Board Options Exchange (CBOE) plans to launch its own bitcoin derivatives product next year.
Meanwhile, Grayscale currently operates the Bitcoin Investment Trust, a traditional investment vehicle with shares solely invested in BTC.
Featured image courtesy of Shutterstock.
Technical Analysis: Bitcoin Dumps and Pumps amid Broad Volatile Correction
The crypto segment has been in turmoil today, as the most valuable coins turned significantly lower, leading to a mini-panic, but they rallied strongly off their slows as buyers stepped in the second half of the session.
Bitcoin fell as low as $5100, for a 15% correction top-to-bottom, but it is now trading near the prior short-term support at $5400. As the long-term picture remains overbought, investors shouldn’t open new positions here, but traders could play a likely move towards the $6000 level, although we still advise small sizes, as correction risks remain elevated.
BTC/USD, 4-Hour Chart Analysis
The other majors were also declining in early trading, led by Ripple, with only NEO and IOTA, holding up well during the sell-off. Both of the latter coins faded away as the rest of the market recovered, but Ripple continued to suffer. For now, the long-term bullish picture is unchanged for the segment, but BTC’s overbought correction could still cause volatility in the coming period. Let’s see the short-term charts after the busy session.
Trade Recommendation: DigiByte
Based on the daily chart we have a buy opportunity. Possible upward movement is confirmed by RSI reversal in the oversold zone and MACD histogram. We can use lower time frame for getting a better entry level. If we look at the 4H chart, we can see a bullish divergence at the support level. It gives us a trend reversal signal. MACD supports upward movement. We can place pending orders for buy at 0.00000220 level with stop orders at 0.00000150 level. Profit targets are 0.00000300 and 0.00000450 levels. Also the part of long positions can be left for long run. If you don’t use leverage, recommended trading volume for this trade is up to 5% from your deposit.
Profit Targets: 0.00000300 and 0.00000450
The trading signal is based on Poloniex chart.
- Asian Market Update – Thursday: Asian stocks mixed on China GDP, Japan trade data October 19, 2017
- Bitcoin Returns to Health After Flash Crash October 19, 2017
- ICO Analysis: Datum October 19, 2017
- Kazakhstan Is About to See Its First Cryptocurrency Backed by Fiat Money October 19, 2017
- Bitcoin Won’t Replace Cash, Says Bank of Canada Deputy October 19, 2017
- Daily Analysis: Dow Leapfrogs 23,000 as IBM Beats Estimates October 18, 2017
- Technical Analysis: Bitcoin Dumps and Pumps amid Broad Volatile Correction October 18, 2017
- Money Leads to More Money – Power to More Power October 18, 2017
- Trade Recommendation: DigiByte October 18, 2017
- Buy TRUP, NWBI and GRPN for the short-term October 18, 2017
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