XRP Price: The Great Discount?

XRP’s price is showing renewed bullish signs on Thursday, though weak market dynamics are keeping momentum in check following a slew of positive developments on the adoption and regulatory fronts.

XRP Price Update

The XRP price touched an intraday high of $0.4613, according to CoinMarketCap, following a two-day stretch of mostly lateral moves. On Tuesday, XRP peaked at $0.4715, its highest in two weeks.

The third-largest cryptocurrency by market cap is showing signs of breaking out, based on the short-term charts. A descending trendline that emerged following Tuesday’s breakout appears to have eroded, setting the stage for a potential short-term rally. That said, dismal trading volumes may prevent the bulls from charging higher. XRP trade volumes fell to $265 million on Thursday, down from more than $400 million this time last week.

At current values, XRP is capitalized at $18.2 billion, where it trails Ethereum by roughly $2.6 billion.

XRP as Collateral

XRP’s underlying price discounts several positive developments favoring widespread adoption of the cryptocurrency. For starters, crypto-backed lending startup Nexo announced Monday it will accept XRP as collateral for instant loans. The decision came in response to growing demand for XRP services from the blockchain community. It also makes Nexo the first lending platform to accept XRP as a form of collateral.

Meanwhile, the New York Department of Financial Services (NYDFS) announced this week that Coinbase, a leading digital currency exchange based in San Francisco, has received approval to custody XRP. This essentially sets the stage for XRP to join the exchange’s coveted list of cryptocurrencies.

From the official notice:

“DFS issued a virtual currency and money transmitter license to Coinbase, Inc. in January 2017 to offer services for buying, selling, sending, receiving, and storing virtual currency. Today, DFS authorized Coinbase Custody Trust to offer narrow services to operate as a custodian for virtual currencies, including Bitcoin, Bitcoin Cash, Ethereum, Ether Classic, XRP and Litecoin.”

As Hacked reported some time ago, XRP had been largely shunned from the major U.S. exchanges, possibly over regulatory fears. The great debate surrounding XRP is whether it should be classified as a security. It remains to be seen whether the decision opens the door for XRP to be listed on other major U.S. exchanges and thus, into the wallets of more traders.

Taking these into account, it is very likely that XRP is trading well below what its fundamentals suggest is fair-market value. However, XRP’s discount largely reflects subdued trading conditions across the entire market. As the author previously maintained, a lack of new market entrants and hesitation on the institutional side have put a firm cap on digital assets stretching all the way back to the spring.

That said, the worst of the crypto-market downtrend appears to be over, and this duly applies to XRP. The cryptocurrency is trading at break-even compared with three months ago, with the only deviation being a sharp downtrend in September that was immediately followed by a historic breakout.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to Hacked.com and Contributor to CCN.com, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi