The cryptocurrency XRP has been a focal point of debate within the digital asset community, with enthusiasts and analysts frequently discussing its price potential and obstacles.
Recently, XRP Avengers, a prominent figure within the XRP community, posed a question that sparked engagement and commentary on Twitter: “What is stopping #XRP price from getting to $50? SEC or Total Token circulation?”
This query led to thoughtful responses from community members, with many focusing on regulatory uncertainty from the U.S. Securities and Exchange Commission (SEC) and concerns about XRP’s token circulation structure as primary limiting factors. Analyzing these factors in depth offers insights into the price dynamics at play for XRP.
SEC Lawsuit and Its Implications
The ongoing SEC lawsuit against Ripple, the company behind XRP, has had significant repercussions on the digital asset. Since the SEC filed its lawsuit in December 2020, alleging that XRP is an unregistered security, the asset’s adoption and market sentiment have been impacted.
Commenters such as Knokkelmann and Charles Fogg highlighted this regulatory barrier as a crucial factor. Fogg noted that the lawsuit “plays a fundamental role in the lack of adoption and the market cap, etc.,” pointing out that uncertainty stemming from regulatory disputes inhibits broader market participation and institutional interest in XRP.
Indeed, regulatory clarity has been a pivotal issue for XRP’s trajectory, with the case causing some exchanges to delist XRP or restrict its trading options.
The SEC’s stance has introduced a degree of hesitation among investors and institutions, delaying the mainstream adoption necessary for XRP’s price escalation. Without a resolution, potential partnerships and projects involving XRP remain in limbo, stalling significant avenues for growth.
Knokkelmann further pointed out that not only regulatory concerns but also the “lack of active use cases” are impeding XRP’s value potential. Use cases, such as cross-border payments, are essential to driving demand for XRP, yet the current legal uncertainty prevents full exploitation of these avenues.
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Token Circulation and Monthly Releases
The second key factor discussed in XRP Avengers’ tweet is XRP’s total token circulation and monthly token releases. XRP’s tokenomics have long been a topic of interest, as its structure differs notably from cryptocurrencies like Bitcoin.
Ripple holds a significant portion of XRP, releasing tokens from escrow accounts into circulation monthly. This planned release contributes to an increase in XRP’s circulating supply over time, which could place downward pressure on its price.
Community member Mohammad Mamavi underscored this point, identifying “total token circulation and monthly token release” as impediments to XRP’s price growth.
Given that Ripple currently holds roughly 42 billion XRP in escrow and releases approximately 1 billion tokens monthly, the rate of new tokens entering the market might outpace demand, especially when adoption remains limited due to regulatory concerns.
This increase in circulating supply can dilute XRP’s value, making it more challenging for the asset to achieve higher price points unless demand rises substantially.
The scheduled releases raise concerns for investors wary of inflationary pressures within the XRP ecosystem. Some argue that Ripple’s large holdings and gradual release strategy could be beneficial in the long term by ensuring a steady supply.
However, in the short term, these releases appear to create resistance against upward price movements, at least until substantial demand is generated to absorb the newly released tokens.
Road to a $50 XRP: What Needs to Change?
For XRP to achieve a price target as ambitious as $50, a convergence of favorable conditions would likely be required, starting with a clear legal status.
This could encourage partnerships that Ripple has pursued in cross-border payments, remittances, and potentially new markets. Such partnerships would enhance XRP’s utility, stimulating demand and consequently increasing its price potential.
Another essential element would be a shift in Ripple’s approach to token distribution or a natural uptick in demand to counterbalance the monthly token releases. If adoption increases in proportion to the monthly token release rate, this circulating supply could theoretically support a higher price.
Use cases like On-Demand Liquidity (ODL), which Ripple has introduced in several countries, offer a glimpse into how XRP can function as a bridge currency for international transactions, driving real-world demand that could offset supply concerns.
Disclaimer: This content is meant to inform and should not be considered financial advice. The views expressed in this article may include the author’s personal opinions and do not represent Times Tabloid’s opinion. Readers are urged to do in-depth research before making any investment decisions. Any action taken by the reader is strictly at their own risk. Times Tabloid is not responsible for any financial losses.
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