XRP has failed to make the splash that many pundits within the cryptospace have been expecting it to in recent times.
Since Ripple Labs Inc Swell event which took place earlier this month at the nation-State of Singapore the token has failed to meet the expectations of investors, XRP fans worldwide and even the general cryptocurrency community considering the gains made this year by the token and its owner Ripple Labs Inc.
In summary, the following factors have contributed to the decline in prices some of which have to do with actions taken by the management of Ripples’ management.
The Escrow Sales of XRP:
The continuous sales of the XRP token by Ripple Labs has contributed in no small measure to the decline in prices of the token.
The token has remained in excess supply for a couple of months and this, of course, has created a price depression as demand for the token has remained low despite the inclusion of over 200 partners on Ripples’ main net who use the token.
The escrow spigot has to stop flowing for market forces to determine the true price of the token.
This sort of intervention by the management of Ripple Labs is not unusual in the cryptospace, however, this does not mean that it doesn’t have a net effect on prices.
The Burning of Stellar Lumens (XLM):
The Stellar Development Foundation (SDF) recently burned about 55 Billion Stellar tokens which represented at the time about half of its token supply.
Reports indicate that prices of XLM surged due to scarcity of its tokens as members of the crypto space sought to get their slice of the XLM pie.
This, of course, puts downward pressure on XRP tokens which are in excess supply in the crypto space currently.
Investors when faced with such choices usually chose the token with less supply.
Cryptocurrency General Regulatory Concerns:
While this year has been generally positive for the cryptospace, but governments and nation-states have been placing restrictions on cryptocurrencies save for a few such as the Chinese government which has passed laws encouraging blockchain technology with its President Xi Jinping calling on the Chinese citizens to “Seize the moment” at the last politburo.
Nation-states are already concerned about the loss of national sovereignty when it comes to fiat money systems.
As such, the expected large inflows of capital into the cryptocurrency markets simply didn’t occur. This contributed to the lack of a Bull run in the cryptocurrency markets and those of XRP specifically.
The Chinese are also leading in this regard as they are set to launch their national cryptocurrency.
Competition from Big Tech:
Now, it is no secret that the big technology companies have expressed massive interest in the crypto space which is one of the reasons why crypto winter ended in the first place.
The emergence of arrangements such as the Enterprise Ethereum Alliance (EEA) and others is a testament to this.
This, of course, has led to the rise of cloud-based cloud solutions such as Microsoft’s Azure Blockchain Platform and others which are proving to be formidable competitors to existing cryptocurrency tokens.
This has affected the general demand of cryptocurrency tokens and XRP hasn’t been left out in this as well.
While the net effect of mass-adoption is yet to kick in, it is expected that prices will still sway sideways as the public is still lagging in its response to the various offerings that the big technology companies have placed.
With the above factors in play, it is little wonder that the XRP tokens have been underpriced considering the vast network of financial institutions that form a part of Ripplenet.
It is expected that the XRP token will remain at this level of prices for some time before the adoption net effect kicks in.
The use of XRP as an asset class for remittances is going to be one factor that will work shortly for the cryptocurrency.
Asides this, the expansion of Ripplenet to allow for other types of services thus diversifying the use-case of the token will also give it a big boost and will encourage the prices to move upwards as greater demand will ensure this happens.
For now, though, prices are going to remain below par unless something major happens and causes a major shift in the status quo.