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November 21, 2018 @ 14:12 +03:00
The intense downtrend of the crypto market is finally having a toll on the best performing digital asset of the month. Ripple (XRP), now the second most valuable cryptocurrency in the market, is no longer up in value on a monthly basis. Throughout the past 30 days, XRP has maintained the $0.5 level relatively well with minimized losses even during a period in which the price of BTC and other major cryptocurrencies fell by around 10 to 20 percent.
As a liquidity network that provides major banks and financial institutions the ability to move cross-border payments with low fees, a large supply of XRP is crucial for the Ripple blockchain network to operate. Similar to EOS, which implemented several controversial rules on its protocol to disallow investors from holding onto EOS for an extended period of time without using it, XRP needs to have a certain amount of XRP in circulation to guarantee seamless transactions for financial institutions.
This week, around $16 million worth of XRP was moved from the Ripple Distribution wallet to an unknown wallet, injecting more XRP into the market. If the supply of an asset is increased artificially and the demand from investors in the market remains the same, then it negatively impacts the value of the asset in public markets. Over the past 12 hours, the price of XRP fell from $0.48 to $0.41 at its daily low. XRP recovered from $0.41 to $0.43, recording a daily loss against the US dollar of around 10 percent. It is possible, given that XRP has been relatively successful in defending the $0.4 support level, that the unforeseen increase of the supply of XRP in circulation affected the short-term price trend of XRP.