Questioning the resurgence, XRP is wilting because Ripple accelerates sales?
With most major cryptocurrencies rebounding sharply in 2019, XRP seems to be "out of the box" in an embarrassing way.
Reverse one by one
CoinMarketCap data shows that 8 of the top 10 cryptocurrencies in the market have risen sharply during the year, but at the same time, XRP has fallen by about 20% (Odaily Planet Daily Note: Another major unrecognized currency is Stabilized currency USDT). But even if it lost about $3 billion in market value during the year, XRP is still the third-largest digital asset after Bitcoin (BTC) and Ethereum (ETH).
XRP sales acceleration?
Many investors blame Ripple for their responsibilities. Data analysis firm Coin Metrics said Ripple and its founders control about 75% of XRP tokens. Its quarterly market report also shows that the company has been selling XRPs at an increasing rate, although Ripple denied the matter on Friday. Coin Metrics data also shows that Redple's co-founder Jed McCaleb can sell 500,000 XRPs a day.
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- Odaily Planet Daily Note: Q4 in 2018, Ripple's quarterly report said that a total of about $129 million XRP was sold; in 2019, Q1, Ripple's quarterly report said that a total of about $169 million XRP was sold; in 2019, Q2, Ripple's quarterly report said A total of approximately $252 million in XRP was sold.
Kyle Samani, co-founder of crypto hedge fund Multicoin Capital, said he is shorting XRP: "In the past three quarters, Ripple's XRP sales have grown steadily, which may put downward pressure on XRP. Smart investors have long realized this. However, for whatever reason, the market has just begun to accept this statement and respond."
Over the past two weeks, more than 2,100 people (as of 2,142) have signed an online petition called "Stop Ripple Dumping" on Change.org , asking Ripple to stop dumping.
"unpredictable" distribution method
But Ripple has raised objections to the idea of sales acceleration. The company said in a statement on Friday that XRP's programmatic sales "% of market capitalization and actual supply inflation rate" are lower than BTC or ETH. The company said that programmatic sales were related to the volume of transactions reported by the exchange, and it was aware that some platforms reported incorrect transaction volumes. Ripple has “substantially reduced XRP sales” and this trend is expected to continue during the quarter. Ripple also said that the data differences found by Coin Metrics can be attributed to "timeline issues." Regarding its quarterly market report, Ripple said, "We are confident that we will be as transparent as possible, and this transparency is unparalleled in the encryption industry."
- Odaily Planet Daily Note: Ripple's XRP sales in the second quarter constitute $107 million in institutional direct sales – institutional direct sales, $145 million in programmatic sales – programmatic sales.
- In the Q2 market report, Ripple said it has decided to stop large-scale provider direct sales at the end of Q2, and will begin to use cryptocurrency data and index provider CryptoCompare's top-level exchange list (CCTT) data in its volume report to resolve The problem of platform transaction volume fraud. Ripple also mentioned that it plans to adopt a more conservative approach to XRP sales in the third quarter.
The sales volume of XRP should have been predictable. As early as 2017, Ripple created a hosting agreement that deposited 55 billion XRPs and promised that it would not receive more than 1 billion XRP per month to assure investors that XRP would not flood the market. Each month, Ripple will provide institutional buyers with unlocked XRPs and re-integrate unsold XRPs into hosting.
Coin Metrics co-founder Nic Carter said the problem is that Ripple's way of re-transferring XRP into an escrow account is different from what many people understand. In addition, according to Coin Metrics' analysis, although Ripple publicly reported XRP sales per quarter, its reported figures differed from actual sales figures by at least two differences.
Carter said: "What I want to say is that this is unpredictable. They don't know in advance the specific amount that will be released from the escrow agreement. So, this is why there is still the possibility of a 'supply shock' in market efficiency. This is not the same as the foreseeable distribution of Bitcoin."
Messari research director Eric Turner also noted the issue of sales acceleration, which said in an email:
“Ripple has been more aggressive in sales recently. Q2 sales ($251.5 million) have increased by nearly 50% compared to Q1 sales ($169.4 million).”
Regulatory and competitive pressures
There is growing concern that regulators will consider XRP to be an unregistered security and may stop trading. On August 5, the plaintiff who filed a lawsuit against Ripple filed a revised complaint claiming that XRP was a securities product.
Co-founder of Multicoin Capital said:
“Regulatory action is one of the main survival threats facing Ripple and XRP. It is understandable that this makes the XRP community foundation uncomfortable and questions the long-term viability of the asset and Ripple.”
Ripple's emerging business – using XRP to improve immediate payments between parties such as banks – is also facing increasing competition. In June of this year, Facebook announced that Libra will be launched to improve payments. The Fed also plans to launch FedNow, a new real-time payment and settlement service, in 2023.
But what worries investors and analysts is still Ripple's sell-off and the fact that its sell-off exceeds expectations.
Messari research director Eric Turner further pointed out:
“Ripple is constantly selling XRP because it’s their main source of income. I don’t think they will stop soon. If someone gives you a printing machine that can spit out hundreds of millions of dollars per quarter, you’ll stop using it. ?"
This article from Bloomberg , the original author: Olga Kharif
Odaily Planet Daily Translator | Azuma
This article was translated from https://www.bloomberg.com/news/articles/2019-08-23/third-biggest-cryptocurrency-barely-causes-a-ripple-amid-rally .
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