Ripple News Update
The main story this morning is Ripple’s dramatic fall below $1.00. It finally happened. And when it did, it inspired even more selling activity, leading XRP prices 30% lower against the U.S. dollar.
The XRP to USD exchange rate was around $0.656241 at the time of writing.
Ripple wasn’t the only one to drop beneath an important benchmark. Bitcoin fell below $10,000, Ethereum below $1,000, and NEM below $0.50. Almost every crypto trended down yesterday.
Ripple (XRP) Price Chart
The worst part is knowing that an XRP price crash was inevitable.
Whether it happened yesterday or two months from now, it was virtually impossible to avoid. What do I mean? Well, consider the trajectory of most emerging technologies—they follow the same pattern: steep incline, steep decline, pessimism…then real growth.
Analysts commonly refer to this as Gartner’s “Hype Cycle.” It’s named after the famous information technology research firm that invented it, Gartner Inc (NYSE:IT). (Source: “Gartner Hype Cycle,” Gartner Inc, last accessed February 2, 2018.)
Each Hype Cycle consists of five stages:
- Innovation Trigger
- Peak of Inflated Expectations
- Trough of Disillusionment
- Slope of Enlightenment
- Plateau of Productivity
It seems clear now that we passed Stage Two in early January. XRP prices peaked at $3.84 and the crypto market cap approached $1.0 trillion. It was the Peak of Inflated Expectations.
The recent XRP price crash presumably brings us into the Trough of Disillusionment. But it’s impossible to be 100% certain which stage we’re passing through because cryptos have no cash flows on which to base reasonable valuations.
We’re basically navigating at night without a compass.
That’s why we trust in fundamental value. All the nonsensical companies and cryptos are washed out in Stage Three. Only the useful survive to regain their value in Stage Four.
If this Hype Cycle sounds like soft science to you, consider that Gartner intimately covers technology in 110 different countries, gleaning insights from 390,000 different clients. It has found the Hype Cycle to be true across the board.
I continue to believe that XRP can ultimately reach our $10.00 Ripple price prediction. However, I’m a little worried that it won’t be able to bounce back within 11 months. Our team at Profit Confidential will continue to monitor the situation, with an eye toward lengthening our time frame to 2019.