Ripple price weekly analysis: The battering Ripple has endured may not last long
Ripple still retains strong technical advantages and despite the battering in price, it may soon show resilience.
Ripple has had a trying week on the cryptocurrency markets beginning the week at US$2.58 and closing out at US$2.02 tracking not far above its weekly low of US$1.98. That price having been recorded only hours ago suggests that the trend may impact long calls on Ripple (XRP) in the short term. That low of US$1.98 is all the more shocking when contrasted against the week’s high of US$3.84 recorded on 4 January 2018.
An investor can take comfort in the realisation that factors external to XRP and its Ripple blockchain may have caused at least some of the price cliff. XRP’s price drop can be contributed to two events. First, there was a readjustment of price calculation by CoinMarketCap which stripped away all of the exchange data from South Korean cryptocurrency exchanges which account for roughly 30% of all cryptocurrency trade. Second, there was a major announcement made on 4 January that the largest US cryptocurrency exchange, CoinBase, would not be accepting XRP to be traded on their platform.
In terms of market capitalisation, XRP has taken a battering, adding to the rough week it has endured. XRP’s market cap started the week at just below US$100 billion and peaked as high as US$148.2 billion keeping in line with its steep price decline losing nearly US$70 billion dollars in terms of market capitalisation. It is safe to say that of the leading cryptocurrencies XRP has taken the worst beating in terms of market capitalisation.
When compared to bitcoin, after the CoinMarketCap readjustment, a large deal of its market capitalisation and price were recouped. This has not been the case with XRP as at the time of writing 9 January 2018. It is hard to say definitively that XRP’s market cap cannot be revived in the coming weeks, but it seems that XRP’s market cap has sustained a shell-shock effect at the hands of the CoinMarketCap readjustment. This pattern suggests that Ripple may not be traded in similar quantities in the world’s busiest markets of South Korea as it is in the US or in other Western markets.
Trading volume began the week in a subdued posture presenting a steady US$3.4 billion worth of 24 hour trade across global markets closing out the week roughly US$400 million dollars higher. Analysis of XRP’s weekly trading volume echoes the conclusion of market cap observations, which is that there is a noticeable difference in trading volumes that exclude South Korean exchange data. The problem is, that even having stripped out that data, there seems to be no relent to the strong downwards pressure on XRP’s nominal value. This could mean that XRP’s price relative to bitcoin may have been overvalued. If that is fact, it spells some concern for the vision of Ripple Labs and the price of XRP.
Regardless of the hard week XRP has endured, the technology of Ripple Labs which underwrites the existence of XRP remains strong especially in as much as its utility in the financial services sector will continue. However, there is a problem with that assumption: there is now a question mark surrounding XRP’s utility in South Korea and perhaps even the broader Indo-Pacific region. Although, that may only be symptomatic of existing stress on the broader established financial system and institutions. At any rate, that is less than certain. But it seems hard to believe that XRP will continue in these doldrums for any sustained period of time before some resilience of investor confidence in XRP is shown.