Headlines have been made of Ripple’s success, from the federal banking license to the rapid expansion of its RLUSD stablecoin. But there is a dissonance: as Ripple’s business does well, the XRP token is not keeping pace, and investors are left to wonder what the future holds for it in terms of returns.
Ripple Expands with RLUSD and Federal Bank License
In one of its more notable accomplishments, Ripple has won federal approval to establish a bank for the management of RLUSD reserves, putting it on the map as an entity to be reckoned with in the stablecoin space. The company’s homegrown stablecoin has a market cap in the region of $2.6 billion, which by real asset volume makes it the sixth largest. About 60% of the RLUSD supply is on Ethereum and 39% on the XRP Ledger, a way for Ripple to connect various blockchains.
The numbers speak to Ripple’s standing in the digital asset world and the strength of its model. With annual sales at around $900 million and an institutional client base of over 1,700, the company’s influence is undeniable.
XRP Token Fails to Benefit from Ripple’s Success
Then there is the matter of XRP. It is not faring as well as the rest of the ecosystem. Lark Davis points out that XRP’s price is hardly moving, even after the advent of ETFs that have drawn in close to $1.8 billion in net inflows; proof enough that the company can grow and attract institutions without the token necessarily following suit.
Brad Garlinghouse, the former head of Ripple, has said RLUSD is in competition with other stablecoins, XRP not included. For all the flourishing of the business since 2017, XRP’s value and use are largely a matter of speculation. Some experts, as Davis has noted, would consider the present $80 billion market cap of XRP to be overvalued when one considers its utility.
Investor Outlook: Risks and Opportunities
On his channel, Davis has made the case that the risk-reward equation for XRP is not as compelling as one might find with other altcoins. A run-up in price is possible, but the risks and tenuous connection to Ripple’s fortunes are off-putting to the more cautious investor.
It is something newcomers would do well to bear in mind: the corporate side of a cryptocurrency and the prospects for its token are two different things. Ripple may have made its mark with new banking and stablecoin ventures, but that is no surefire way to make money for those holding XRP.
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