Ripple: Moving Toward Mass Acceptance

In the interest of full disclosure, I own nary a drop of XRP.  However on nearly a daily basis the question comes to mind: why not? Part of the resistance comes from my grudging respect for technical analysis.  

In other words, the price action of XRP is hardly inspiring. The fact that Ripple was one of the worst performing cryptos this year falling over 90% doesn’t help.  But you can’t blame just one crypto for the sins of everyone.

The Ripple story of being part crypto, part closely controlled company with cofounder Jed McCaleb selling billions of XRP tokens isn’t exactly news, so one can assume those investors who were offended by these issues either sold their XRP or never got involved in the first place.

What is the most irritating point is how poorly XRP is performing in the face of the recent steady supply of favorable news. Here are two data points that tell the story.  On September 25, XRP was trading around $0.53. At the time of this writing, the price was $0.47, a drop of over 11% in just under a month. During the same period Bitcoin prices fell also but just 2%.

We could have picked other cryptos to compare but because these two are so suited as a method of exchange as well as a storehouse of value, not to mention they are both among the most highly valued cryptos, they make for a suitable comparison. The point here is that in the last few weeks XRP has been blessed with favorable news and yet cannot seem to convert this to better investment performance.

Swell 2018: A News Bonanza

On October 1-2, Ripple hosted the SWELL event in San Francisco, CA. The event was meant to connect the world’s leading experts in policy, payments and technology.

The event was packed with political literati including former President Clinton.  When you consider that a keynote address from Clinton could cost Ripple well over $100,000 why would they waste his star power on simple chit chat? Here are the headlines taken directly from the Ripple website.

Day one featured Ripple news: xRapid is commercially available and will go into production with three financial institutions. This is very positive news.

On day two, Ripple released the first Blockchain in Payments Report during the keynote session featuring Chief Market Strategist Cory Johnson alongside Celent Senor Analyst Alenka Grealish. Key among the findings: mainstream blockchain adoption is at an important tipping point. This was less important the xRapid but still a headline maker.

By October 3rd, the day after concluding the Swell event, XRP price dropped 6%. It is possible XRP investors anticipated the event by buying in advance of the conference but the evidence isn’t exactly compelling.

XRP Preferred By A Landslide

If good news for Ripple is bad news for XRP, consider this. According to today’s CryptoGlobe, a recently released survey by the firm AEVI, XRP is the favored crypto among mass users.  It is safe to assume that respondents to the survey are Fintech aficionados, which means the results may not be completely reflective of the population in general.

Participants in the survey were asked to choose a single form of payment for their expenses. A surprising  81% of respondents said they would use XRP, 10% preferred BTC, 6% said they’d use LTC, and only 3% wanted to use ETH for daily purchases.

Whenever findings like these are announced, you have to scrutinize the results closely but even if you heavily discount the findings they still provide some potent headlines. These days the size of the headlines often carry more weight in setting crypto prices than longer term fundamentals. This however does not appear to apply to Ripple.

As I admitted at the start, I do not own a single XRP and no one is paying me to promote any crypto.  But once I figure out why good news for Ripple is bad news for XRP, I might just be inclined to take the plunge.  

Featured image courtesy of Shutterstock. 

James Waggoner is a veteran Wall Street analyst and hedge fund manager who has spent the past few years researching the fintech possibilities of cryptocurrencies. He has a special passion for writing about the future of crypto.