Ripple has been one of the top altcoins since the early days of the crypto space, and at the beginning of 2018, it even climbed as high as USD 3.79 corresponding to an astonishing market cap of USD 147 billion.
Simultaneously, Ripple fans thought the token could one day be worth thousands of dollars, and they even believed that it would dethrone Bitcoin as the king of the crypto space. However, the market went in the complete opposite direction for Ripple, and zooming out on the long term chart the price since early 2018 has been decaying like radioactive waste. This article explains why Ripple’s market is consistently and predictably declining over the years, and speculates about what the future of this asset looks like.
The Ripple market since early 2018 courtesy of CoinMarketCap. Blue line is market cap, green line is USD price, and orange line is price in satoshis
First off, the price of Ripple currently is USD 0.19, meaning people who bought at the all-time high have lost 95% of their investment, and the market cap has dropped by roughly USD 138 billion. In March, Ripple dropped to as low as USD 0.13 during the coronavirus pandemic that helped induce a global economic crash.
Shockingly, Bitcoin and most other major cryptocurrencies bottomed out in December 2018, but Ripple was actually worth USD 0.30 to USD 0.40 during the bottom of the 2018 bear market, and is worth much less currently. In other words, Ripple has not revived alongside the rest of the crypto market and is stuck in a permanent bear market.
Looking at Ripple’s price relative to Bitcoin, i.e. the price of XRP in Satoshis, is even more dramatic. At Ripple’s peak, it was worth 26,050 satoshis, which means each token was worth 0.00026050 Bitcoins. As of one year ago, Ripple was worth 4,700 Satoshis, and at the beginning of 2020, it was worth 2,700 Satoshis. Now Ripple is worth just 2,020 Satoshis, which is the lowest level since early 2017.
Notably, whether the Bitcoin market is bullish, bearish, or in-between, Ripple has been consistently losing value relative to Bitcoin.
Ripple’s Centralized Nature and Lack of Utility is Destroying its Value
There are a couple of primary reasons why Ripple is constantly shedding value. First off, practically no one uses the token as a currency and instead, people generally use Bitcoin or Ethereum. The company which created Ripple, Ripple Labs, is involved with developing possibly useful cross-border payment technology, but it is not even used as the primary means of payment on Ripple Labs’ cross-border platforms. Essentially, Ripple has practically no utility, and the only reason people are buying it is for trading and investment purposes.
The other major reason is that Ripple’s supply is highly centralized. When the network was launched all 100 billion coins were given to Ripple Labs and its Founders, meaning that every single coin in circulation today was either purchased from Ripple Labs or given away.
Indeed, Ripple Labs is constantly dumping Ripple, and this is what’s really destroying the token’s value. Whether Ripple is in a bull market or bear market, Ripple Labs dumps massive amounts of coins every month. For example, in 2017 Ripple Labs dumped USD 181.6 million, in 2018 they dumped USD 535.6 million, and in 2019 they dumped USD 346 million, totaling USD 1.06 billion in just 3 years.
Ripple Labs tries to make these dumps look minuscule by comparing them to the global Ripple trading volume. However, if they compared these numbers to market liquidity it would be revealed that these centralized dumps eat up most of the liquidity in the Ripple market.
In other words, Ripple Labs is constantly dumping as much as they can without completely collapsing the market, and the end result is a constantly declining long term price. Other effects of this constant dumping are that when Ripple rallies it soon afterwards crashes, and this pump and dump cycle has been repeated roughly five times so far in Ripple’s history. Also, Ripple’s bear markets are deeper and longer than the rest of the crypto market.
Unfortunately for the Ripple market, this regime of constant centralized dumping looks to continue for the foreseeable future. Ripple Labs and the Co-Founders still have 55.7 billion tokens that they haven’t dumped, and it could take decades for the company to dump all of that crypto.
Ultimately, Ripple Labs is making ridiculous amounts of money via dumping their pre-mined coins, and the money that Ripple Labs gains comes out of the pockets of everyone else in the world who holds Ripple. Thus, if you don’t want to redistribute your wealth to a company Labs, then don’t buy any their tokens.
On a final note, it seems inevitable that Ripple’s long term decline will continue. There may be some more pump and dumps in-between, but long term Ripple appears to be on track to eventually have a market cap less than USD 1 billion.
To make a long story short, dump your Ripple before Ripple Labs dumps on you.
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