Ripple trading under US$1 after 47% drop in 24 hours
The dramatic drop in the price of Ripple shows the volatility of the cryptocurrency market.
Ripple (XRP) has lost 47% of its value in mid-week trading going from US$1.71 dropping very quickly to US$0.90 in as little as 24 hours, according to CoinMarketCap. That has extended the losses XRP has experienced from its all-time high on 4 January, where it recorded US$3.79. Ripple had recovered slightly at the time of writing to US$1.07.
XRP is the native token of the Ripple blockchain lead by CEO Brad Garlinghouse. Ripple’s blockchain technology allows instant transfer of funds in cross-border payments.
According to Mackinsey international payments research for the year 2015, the global cross-border payments system is worth US$135 trillion annually.
Ripple Labs is seeking to capture that market by providing global financial institutions and their clientele with technology to instantly transfer funds anywhere on Earth in an instant. XRP is used in the case that an institution may not have enough of a foreign country’s currency to make a transaction.
In that case, XRP becomes useful as a transfer of value, and potentially makes the existing SWIFT system of international payments not so swift.
Volatility is a problem for Ripple Labs who would like to see XRP used widely within the system of cross-border payments. This is because for a financial institution to make a transfer in a volatile cryptocurrency market, that transfer could mean a large loss occurring in a very short time.
Institutional investors will welcome any stability in the price of XRP as its technology is among the most sought-after in the cross-border financial services industry.
Central banks such as the US Federal Reserve and the English Central Bank have conducted “proof of concept” testing with Ripple Labs technology and found a measure of success.
In addition to that, the Monetary Authority of Singapore has revealed that Ripple Labs was among a group of providers during its blockchain experiment phase.
Singapore is among the world’s largest producers of cross-border money flows and Ripple Labs has identified Southeast Asia as a priority market. This has paved the way for Standard Charter, a Singapore based bank, to make cross-border payments with Axis Bank of India and RAKBANK of the United Arab Emirates.