Ripple’s XRP token continues to be an underperformer but frustrated investors will be comforted by the continued progress being made in RippleNet adoption.
With XRP trading on Kraken at prices ($0.23124) last seen in November 2017, the only way may be up for long-suffering and ever-hopeful bulls.
An XRP/USD death cross event on 13 August has hung over the trading environment, but we could be nearing the beginning of the end for this period of bearish sentiment.
The XRP price has been trading below the Ichimoku cloud conversion line (blue in chart below) since 7 November, but that changed today on the 1-day chart. That is a tentative bullish signal, and perhaps confirmation of the opening of an accumulation phase.
Sprout Bank and Fast Remit XRP on-demand liquidity success
At the Swell 2019 conference held in Singapore earlier this month, Ripple client solutions director, Ross Edwards, and vice president of product marketing, Kevin Mole, provided an exposition of on-demand liquidity (ODL) on RippleNet.
The pair looked at how UK challenger bank Sprout Bank and Australia’s Fast Remit money transfer service are using RippleNet to solve the “top problems” encountered when sending global payments, namely speed, certainty. Liquidity management and transparency.
“Once the beneficiary, Sprout Bank, receives the funds, they send a message back to Fast Remit through RippleNet. This is a simple step, but it’s critical. Through this interaction on RippleNet, Fast Remit and Sprout Bank’s customers are able to get confirmation in real-time that their family and friends have received those funds.”
The pair explained how RippleNet solves the problem for businesses of having to create prefunded accounts in destination currencies, especially where emerging market countries are concerned. This is how costs start to be mount up for transacting parties.
But using XRP to bridge the two currencies, payments can be sent instantly and “in the local currencies on both side of the transaction”.
Ripple completes MoneyGram investment
A couple of days ago Ripple completed its $50 million investment in money transfer firm MoneyGram, with a payment of $20 million at $.10 a share.
Moneygram is now the key driver of RippleNet on-demand liquidity adoption.
In a press release on 25 November MoneyGram chief executive and company chairman Alex Holmes, said of the deal: “Our partnership with Ripple is transformative for both the traditional money transfer and digital asset industry — for the first time ever, we’re settling currencies in seconds.”
Meanwhile, regarding RippleNet’s ODL progress, MoneyGram International’s chief global operating officer Kamila Chytil emphasised the cost and efficiency benefits:
“We’ve leveraged On-Demand Liquidity on RippleNet to dramatically reduce our operational costs and process global payments at unprecedented speeds.”
Kamila Chytil, MonetGram International chief global operating officer
XRP a tenth the volatility of fiat
However, Ripple critics are often quick to bring up the issue of crypto volatility with the implication being that XRP is therefore poorly suited to being a bridging currency.
In a discussion at The Economic Club in New York at the end of October, Ripple chief executive Brad Garlinghouse took issue with Fox Business anchor Liz Claman bringing up precisely this issue.
“If you multiply 270,000 seconds [just over 3 days] in a low-volatility asset and you compare that to 3 or 4 seconds in a highly volatile asset like XRP, it turns out you are taking less volatility risk with an XRP transaction than you are with fiat,” said Garlinghouse.
Given reasonable assumptions for a comparison for two payment use cases given the different times that the currencies would be held in fiat and XRP transactions, Ripple analysis shows that XRP volatility is a tenth that of a “typical fiat SWIFT payment”.
Note that:
• The XRP = 3-day Fiat column is how long XRP must be held as the exchange medium before it experiences the same volatility as a fiat-only transaction over three days;
• The Fiat = 1-minute XRP column demonstrates how fast a fiat payment would have to occur to limit its volatility to the same as a 1-minute XRP transaction;
• And the XRP 1-minute/Fiat 3-day column is the fraction of three-day volatility you typically witness in a one-minute XRP transaction.
So, is XRP trading near its floor? There are good technical and fundamental reasons to suggest that may well be the case.