In response to growing concerns about XRP’s recent price performance, cryptocurrency analyst CryptoTank (@Tank2033js) has provided a detailed explanation of the factors influencing the digital asset’s valuation.
His analysis offers a fresh perspective on XRP’s potential utility in the global financial system and its implications for future price movements.
CryptoTank addressed the widespread inquiries regarding XRP’s apparent lack of upward momentum. He attributed this stagnation primarily to the current underutilization of XRP, particularly by major financial institutions. This observation suggests that increased adoption by banks and payment providers could be a key driver for future price appreciation.
Reevaluating XRP’s Circulating Supply
CryptoTank’s analysis revolves around the misconception of XRP’s circulating supply. While the commonly cited figure stands at approximately 56 billion tokens, he argues that this number does not accurately reflect the amount of XRP actively participating in market transactions.
According to CryptoTank’s estimates, only about 20% of the total circulating supply is actively traded daily. The remaining tokens are held in private wallets owned by whales, and exchanges. This distinction is significant when considering the actual liquidity available in the market.
CryptoTank proposes that the price of XRP is fundamentally determined by dividing the value and volume of transactions on the XRP Ledger (XRPL) by the effectively circulating supply. This perspective shifts the focus from total supply to the portion of XRP actively involved in facilitating transactions.
XRP’s Potential Reach Among Financial Institutions
The analyst’s bullish outlook on XRP stems from its potential to become the primary settlement token for banks and financial institutions. He envisions a future where banks utilize their tokens, such as Central Bank Digital Currencies (CBDCs), in conjunction with Ripple’s stablecoin RLUSD within Automated Market Maker (AMM) pools on the XRPL.
To illustrate the magnitude of this potential, CryptoTank references the daily transaction volumes of major financial entities like SWIFT, SBI Japan, Bank of America, and J.P. Morgan, which collectively process trillions of dollars in settlements each day.
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Projecting XRP’s Future Value
CryptoTank presented a hypothetical scenario where the XRPL processes just 10% of these institutions’ daily transactions, noting that the network would handle approximately $2.5 trillion in daily volume.
To ensure seamless operations and prevent failed transactions, CryptoTank suggests that liquidity pools would need to be valued at around $5 trillion, double the daily transaction volume.
Based on these projections and considering the effective circulating supply, CryptoTank calculates that XRP would need to trade at $500 to provide adequate liquidity for such transaction volumes. He dismisses traditional market cap discussions as irrelevant in this context. Notably, another expert recently predicted another path for XRP to reach $500.
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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