Ripple has a lot going for it.
But the cryptocurrency linked to the company isn’t doing well.
What’s holding XRP back?
XRP has a lot going for it.
The cryptocurrency is intimately linked to Ripple, the company whose founders developed it, and the venture’s fortunes.
But despite Ripple having notched several big wins over the past year, XRP is still trading 62% below its $3.65 record high from July.
“XRP is basically being held back by the same two forces that have capped most large-cap alts in this regime: macro noise and flow quality,” Louis De Backer, crypto trading analyst at financial services platform Marex, told DL News.
His comments come as the US’ conflict with Iran weighs on the global market. With talks between Washington and Tehran at a standstill, the flow of oil through the Strait of Hormuz has catapulted the commodity’s price above $114 per barrel.
Elevated energy prices make it increasingly unlikely that the Federal Reserve and other central banks will cut interest rates. High interest rates are seen as a headwind for cryptocurrency prices.
“With energy at four-year highs and the Fed messaging more divided, risk budgets stay tight and investors default to BTC first, then ETH,” De Backer said. “In that tape, XRP tends to behave like beta, it moves with the complex but struggles to attract fresh standalone demand.”
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If the macroeconomic environment was to calm down, that would enable traders to move beyond Bitcoin and Ethereum and start to trade with altcoins like XRP, De Backer said.
“The second constraint is positioning versus spot depth,” De Backer said. “When liquidity is thin and derivatives flows dominate, moves in XRP can be sharp but they often fade. You need consistent spot buying to turn a push into a trend, otherwise it remains range-bound and reactive.”
For the Ripple-linked cryptocurrency to rally, it needs to break out of its current level of trading between $1.35 and $1.45 and hold the new, higher level for longer, he added.
“In short, XRP isn’t broken,” De Backer said. “It’s just stuck in a market that is still trading macro first and rewarding the deepest, most liquid exposures. When that pressure eases and spot flows show up, XRP can move quickly.”
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Ripple’s successes
Ripple has been on a tear of late.
The company has ended its long-running legal feud with the US Securities and Exchange Commission, seen President Donald Trump include XRP in a proposed strategic digital reserve, signed a deal with one of South Korea’s biggest insurance companies, and has made a number of acquisitions.
In March, Ripple achieved a $50 billion valuation, according to reports. That’s more than double the market capitalisation of stablecoin giant Circle.
XRP exchange-traded funds launched in November have mostly seen positive inflows, according to Coinglass.
Yet, even despite the prospect of global tension easing the strain on markets, not everyone is bullish that XRP will ever reclaim its former glory.
“I’m just not convinced that in this marketplace, XRP is going to succeed at regaining the stature that it once had, which is sad and unfortunate,” Ric Edelman, founder of Edelman Financial Engines, told DL News in March.
Polymarket punters share that sentiment, at least in the short term. Betters on the prediction market give XRP a 13% chance of hitting $3.60 before the end of the year. Conversely, they give it a 61% chance of hitting $1 before January 1.
Eric Johansson is DL News’ managing editor. Got a tip. Email him at eric@dlnews.com.
