The cryptocurrency community has recently been abuzz with discussions surrounding the striking similarity in price movements between Ripple’s XRP and Stellar’s XLM. David Schwartz, the Chief Technology Officer at Ripple, offered his insights into this intriguing phenomenon.
Schwartz acknowledges the complexity of the issue, highlighting evidence that both supports and contradicts the idea of a direct link between the two cryptocurrencies’ internal dynamics.
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One interesting observation he made was the minimal impact of Stellar’s substantial token burn event last year. Despite reducing its total supply by half, the burn did not cause a significant divergence in XLM’s price or its correlation with XRP.
David Schwartz noted:
“The one bit that’s the most convincing to me is that Stellar burned half their supply and there wasn’t so much as a blip on their price chart or any real deviation from XRP’s price correlation.”
This evidence suggests that a similar token burn by Ripple, which holds a significant portion of XRP, might not necessarily translate to a price increase for XRP. Schwartz reportedly analyzed charts comparing the price movements of both tokens before and after the Stellar burn, and they revealed no substantial changes in their relative performance.
While XRP and XLM exhibit a synchronized price pattern, it’s crucial to recognize their distinct tokenomics. XRP boasts a total supply of 99.98 billion tokens, with 55.43 billion in circulation.
According to Coinmarketcap’s data, XRP’s price is around $0.5375, with a market capitalization of $29.1 billion. XLM has a total supply of 50.001 billion tokens, with 28.976 billion circulating. Its price is approximately $0.111, leading to a market capitalization of $3.14 billion.
So, what could be driving this price correlation despite their differences? The answer likely lies in their intertwined history and the broader market dynamics. Jed McCaleb, a co-founder of Ripple, created Stellar as a decentralized alternative.
As a result, the Stellar ecosystem often mirrors the movements of XRP. Additionally, investors often seek opportunities in similar assets, leading to capital flowing into both markets and potentially causing their price movements to converge.
Read Also: Ripple CEO’s Cryptic 78-Day Reference Sparks XRP Price Speculation Within the Community
Further analysis is required to fully understand the nature of this price correlation between XRP and XLM. Several factors beyond tokenomics might be at play, including overall market sentiment towards cross-border payment solutions, regulatory developments impacting the cryptocurrency industry as a whole, and even the trading practices of major cryptocurrency exchanges.
By delving deeper into these areas, the cryptocurrency community can gain a clearer picture of the forces driving the price movements of XRP and XLM. This improved understanding can benefit investors and market participants by allowing them to make more informed decisions.
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