As the bloodbath in the cryptocurrency market continues, the focus is on which digital coins are falling more in value compared to the rest. And right now, Ripple XRP is in the red more than the other major digital currencies. It is true that pessimism has taken over the cryptomarket and fear and uncertainty are leading this phase of panic selling. However, the point to note about Ripple XRP is that it is different from other cryptos. It works within the system to enable faster and cheaper financial transactions. And regulators are most likely to be at ease with Ripple XRP compared to other cryptocurrencies, so why the plunging Ripple XRP price?
Ripple January 2018 Crash
Why is it suffering more than the other major cryptocurrencies? The main reason appears to be the reported heavy-handedness of South Korean authorities who would introduce strict regulations for cryptocurrency trading and may even shut down domestic cryptocurrency exchanges.
Ripple XRP has been one of those volatile cryptocurrencies known for its wild swings. It crossed a high of over $3.80 early this month but is now trading at a little over $1.10.
South Korea had primarily been the reason behind the phenomenal rally in the Ripple XRP price and now the bout of uncertainty has led to massive selling. The rising interest from the Asian country had driven the XRP price to record highs, and with the current clampdown, it has suffered a massive blow.
However, when this phase of panic selling is over, the Ripple XRP price may start climbing higher. In the long run, the rise of the Ripple XRP price will depend on how the Ripple community convinces others of the underlying value that the token is offering. There is an overwhelming number of crypto enthusiasts who believe that Bitcoin and Ethereum offer solutions to real-world problems whereas this is not the case with Ripple XRP.
As we had written earlier, banks and other financial institutions are experimenting with Ripple technology and do not show particular interest in its token XRP.
There was something to cheer about for Ripple believers when Ripple shared the news last week that Moneygram International Inc (NASDAQ:MGI) will use Ripple technology as well as XRP. Ripple claims a massive reduction in transaction costs if XRP is used on its network.
But coming back to the present crypto crisis, it is yet to be seen what exactly the authorities are going to do in order to regulate and curb crypto trading in their countries. An action like disallowing the opening of new accounts is hugely detrimental to the Ripple XRP price. The Ripple XRP price had also taken a hit when the rumored Coinbase listing did not happen.
Will Ripple XRP Recover?
The current reversal in fortunes in the cryptomarket reminds everyone that:
- all or a major part of funds invested in cryptocurrencies may vanish overnight, and
- the government still holds the upper hand when it comes to the future development of the cryptomarket.
As a matter of fact, the shocking reaction in the cryptomarket should not come as a shock at all. It has always been the case with cryptocurrencies—there are high returns associated with them because the risks are high. And extremely high returns mean extremely high risk. The current plunge in values of cryptocurrencies should etch this truth once and for all in the minds of crypto traders.
The time is also ripe to take a closer look at the inherent utility of these digital tokens instead of getting carried away by their past returns. Because, ultimately, it all comes down to what problems these crypto assets are solving and how.
The rise of the XRP price depends on more of such news flow. In the short term, fear and uncertainty are driving prices down. However, in the long run, the value of XRP lies in what value it offers to users. And if there is a positive turnaround from the authorities, Ripple XRP may come back to its previous high.
It is true that the bearish sentiment has engulfed all in the crypto space, and Ripple XRP is no exception. Despite the fact that it is so different from Bitcoin, there are downsides to being one of the top digital coins. And the current levels may persist for a while as the current bloodbath is ruled by emotions that will take time to turn back to normal.