What Factors Affect The Price Of Ripple XRP?
In addition to analysing Ripple’s historical prices, it’s important to identify the key factors that could affect its price in the future. This will make it easier for you to make your own predictions based on current cryptocurrency trends and ultimately find an informed answer to the question ‘should I invest in Ripple?’
Let’s take a look at the top factors that can affect the price of XRP.
The SEC Lawsuit
In late December 2020, the US Securities and Exchange Commission (SEC) filed a lawsuit against the Ripple XRP platform, its CEO Brad Garlinghouse, and chairman for selling unregistered securities worth $1.3 billion. Garlinghouse called the lawsuit ‘an attack on crypto at large’ — and although the incident hasn’t yet had a particularly devastating effect on the price of XRP, investors could definitely expect to see a price crash if the lawsuit succeeds.
Garlinghouse told CNN: “The SEC is fundamentally wrong as a matter of law and fact. The SEC has permitted XRP to function as a currency for over eight years, and we question the motivation for bringing this action just days before the change in administration.”
The dawn of new cryptocurrency regulations is likely to affect the price of almost every crypto on the market. But as we mentioned earlier in this article, many experts believe that Ripple is better placed to weather the storm of strict government intervention. As a result, while new regulations are likely to cause investor uncertainty and could lower the price of conventional cryptos, it could send the price of Ripple soaring.
Supply And Demand
The higher the demand for any cryptocurrency and the lower the supply, the more likely we are to see an increase in price. Unlike cryptos such as Bitcoin, the value of Ripple is closely controlled by its parent company, Ripple Lab. The company currently holds more than half of all total Ripple tokens in order to keep the price under control. However, if Ripple Lab suddenly decided to sell these off, it would flood the market with new tokens, which would have a huge effect on the price.
The presence of so-called whale bots on cryptocurrency exchanges can massively manipulate the price of crypto tokens. Whale bots are big holders who run software that makes trades automatically, often on a huge number of different platforms and assets simultaneously. This results in artificially creating volatility, which consequently drives the price of cryptocurrencies up or down.
Digital Transformation In The Financial Sector
Digital transformation is one of the biggest buzzwords in the financial sector today. In fact, according to recent statistics, one-third of all UK financial services firms have identified ‘digital transformation’ as their top business priority for the coming years.
With high exchange rates and legacy systems making it more difficult for companies to make online payments, more are likely to look towards technology such as Ripple. The news that Ripple will soon be able to offer smart contracts makes this all the more likely — and if more banks start to adopt it, the demand for XRP will increase, successfully driving up the price.
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