No Peaks Without Troughs: A Quick XRP/USD Forecast

Ripple is an oddity among the top 10 cryptocurrencies by market capitalization. Currently holding at the number 3 spot with more than $19 billion, Ripple is neither a pure cryptocurrency, like frontrunner Bitcoin, nor a limitless platform, like runner-up Ethereum. It is a rather centralized coin with a very clearly defined and narrow use case: facilitating the movement of foreign currencies from one bank to another. Yet, Ripple’s ironclad protocols and seemingly sky-high potential for market share have brought in investors by the ton. These investors pushed a coin with a total supply of 100 billion into the top 3 at the June 2018 XRP to USD price of just $0.50.

Crypto investors are still reeling from the so-called Long January, coming off December 2017’s record highs, and Ripple has yet to make a full recovery. However, it’s possible to look at Ripple’s historical charts and make some educated guesses about what the coin’s price will be relative to the U.S. dollar over the next several months.

Now, anyone who claims to have a crystal ball when it comes to cryptocurrency pricing is probably either lying or literally from the future, but cryptocurrencies are a market like any other, and so they should follow basic market rules. We’re going to look at:

● What Ripple’s past can tell us about its future.

● Trends for the market as a whole moving forward.

● What Ripple’s boosters and detractors are saying about the future XRP/USD spread.

Prehistoric Ripple

In the fast-paced crypto world, where prices can swing by double-digit percentages in a matter of hours, year-long charts represent fairly ancient historical data. For that reason, we’re only going to look at Ripple’s price over the past year or so. That market was wild enough without throwing in additional noise from the Ripple protocol’s initial release in 2012 or subsequent years.

In June 2017, Ripple had a market cap of $10.5 billion and a per-coin price of $0.27. The XRP/USD price remained surprisingly flat until mid-December, at which point Ripple — along with most other cryptocurrencies — began rising meteorically. Ripple reached its high-water mark in early January with a market cap of $135 billion at $3.51. By early February, however, the price had dropped to just $0.74, yielding a $29 billion market cap. That has slowly trended down to the current $19 billion market cap with a $0.50 price.

At first glance, the numbers seem incredible. Market cap alone rose by a factor of six. Placed into context, however, Ripple generally followed the crypto market. Bitcoin also hit an all-time high in December, and since most exchanges rely on BTC/USD pairing as the basis for their alternative coin pairings, Bitcoin tended to drag everything along with it — both up and down.

The Current Market

That leads directly to current market conditions. Despite hopes for a Bitcoin recovery in early May, the price has remained fairly subdued since the craziness of the December/January time frame. Increases and decreases alike tend to be short-living and not especially meaningful. That is, they react to outside market forces like U.S. securities investigations or high-profile hacks.

In other words, cryptocurrency is adrift at the moment. There are no large internal drivers to justify the price, and there are no large internal negatives to subtract from the price. All price movements follow Bitcoin with relatively little independence for the alternative coin market (including Ripple).

The thinking is that this will change over time. Most alternative coins right now — Ripple included — are in the preliminary stages of adoption. For the layperson, “cryptocurrency” is synonymous with “Bitcoin.” As coins like Ripple develop their own independent market dynamics, they’ll likely break free from Bitcoin’s stranglehold and start to display their own unique market characteristics.

In the short term, however, watch Bitcoin. Where Bitcoin goes, Ripple and other alternative coins are likely to follow. This will be the case until alternative coins make a big break from Bitcoin either whole or in part. This could come about due to a widespread failure of Bitcoin, which is unlikely, or more mainstream use and adoption of individual alternative coins.

What Folks Are Saying

The vast majority of users in Reddit’s Ripple forum predict a slow but steady market in the months to come, as Bitcoin shakes itself out of a long-term bear market. Ripple, which has yet to decouple from Bitcoin, will likely follow right along, the forum users say.

“The majority of long-time investors haven’t even heard of Ripple, let alone XRP,” said one Ripple booster. “The next three months could be very boring; we could range below $1. But I truly believe that at some point it will reach a price none of us could ever have imagined.”

The user bases that prediction on new exchange-traded funds and more clarity from the U.S. Securities and Exchange Commission on regulation.

“Now is the time to accumulate,” the user added. “This is where smart money enters. Don’t FOMO (fear of missing out) later on bargain-basement prices.”

Ripple has its fair share of online detractors, as well. In a general cryptocurrency forum on Reddit, one user in a skeptics’ thread acknowledged that Ripple’s payment protocol for banks will likely gain widespread adoption. However, the user pointed out that XRP isn’t necessarily pegged to the payment protocol, and its centralized nature represents a big long-term risk.

“The fact still stands that over 60% of the currency is owned by one institution,” the user said. “Given how low the volume is for cryptocurrency (in comparison to stocks), this is a major risk.”

The Prediction

So, what’s the year-end price prediction for XRP? The wholly unsatisfying answer is “it depends.” Mainly, it depends on how the market treats Bitcoin over the course of the year, and that will largely depend on outside forces beyond the market’s immediate control.

Few observers expect another leap to all-time highs by year-end. It stands to reason, then, that Ripple will likely not return to its all-time highs in 2018 barring some major external victory for crypto as a whole or big Ripple-centric news. XRP at $1 or slightly below seems to be the safest bet.

No Peaks Without Troughs: A Quick XRP/USD Forecast was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.