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Investigating the causes of the sharp jump in the price of XRP

The Ripple price has jumped significantly in recent days and is currently trading in the $ 1.8 range. Experts cite the activity of traders in the Ripple market and the positive developments surrounding the company’s lawsuit with the US Securities and Exchange Commission as the reasons for the growth of this digital currency.

to the the report Coin Telegraph reports that Ripple shares are trading between $ 2 billion and $ 3 billion in the secondary market. Ripple is the maker of the XRP token infrastructure used in networks such as RippleNet to process international payments.

This valuation for Ripple company while the value of the total XRP assets of this company has now reached more than 70 billion dollars, which is tens of times the value of the company itself.

Michael Novogratz, billionaire investor in digital currencies and CEO of Galaxy Digital, said:

Ripple shares are “traded” in the secondary market with a valuation of 2 to 3 billion dollars. XRP is worth about $ 70 billion on their balance sheet. One of the prices seems wrong. If the price of XRP is close to the solution [پروند ریپل] The company’s shares are reportedly very cheap. Otherwise, the XRP token looks very expensive. Do you have an opinion?

Is XRP undervalued?

According to Leonidas Hadjiloizou, a veteran digital currency researcher, the XRP locked in Ripple’s balance sheet may not have been calculated in the company’s stock value.

These assets will not be available until they are released. This prevents them from being priced in the company’s stock value.

Hajilvizo said:

$ 62 billion XRP is locked in Ripple balance sheet as collateral. Meanwhile, Ripple’s sale of XRP is one of the things targeted by the SEC. Therefore, since the status of XRP is still unclear, the XRP asset market may not have valued Ripple.

In December 2017, the Ripple team explained that 1 billion XRP units would be released each month under the company’s guarantee, and that this would be done for 55 consecutive months.

The Ripple team said at the time:

This guarantee includes an independent head office guarantee that will release one billion XRP per month over the next 55 months. This places a high limit on the amount of new XRP that can enter the circulation. The amount of XRP that is actually released to enter the circulation is probably much lower.

Theoretically, if the amount of XRP on the company’s balance sheet is released and the XRP price does not fall, Ripple stocks are undervalued.

The dispute over the value of Ripple shares and the amount of XRP assets arose when the price of XRP rose above one dollar, despite an ongoing lawsuit by the Securities and Exchange Commission (SEC).

Since April 1, the price of XRP has risen from $ 0.57 to close at $ 1.95 (April 25).

What causes XRP to grow?

Ripple price chart
Ripple price chart

Over the past two weeks, the main factor driving XRP’s 240% growth has been Ripple’s legal battle with the SEC. The company’s attorneys obtained access to the SEC’s internal records on digital currencies. The court also barred the SEC from disclosing the financial records of the two Ripple executives.

Another reason may be related to the convergence of bitcoin (BTC) and coin trading; Especially since the price movement of bitcoins has been one-sided and this allows the penins to grow.

Kelvin Koh, managing director of Spartan Group, one of the largest Difai-focused funds in Asia, said large quantitative funds are trying to benefit from the convergence between bitcoins and major altcoins.

Hence, the process of capital movement towards coin and return to bitcoin occurs from time to time. Kuh wrote:

The reason this happens periodically is that there are a large number of cash registers engaged in the convergence trade between bitcoins and a number of liquid coins. When these coins are cheaper than bitcoins, they accumulate them and when they become more expensive, they turn them into bitcoins. There is no fundamental analysis, so do not try too hard to rationalize this process. The effectiveness of this strategy has been proven over time and there are many managers who play this game; To the extent that this process becomes inevitable and continuous.


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