Crypto Data Project Messari Issues New Report Estimating XRP Market May Be Overstated By Billions

Messari has made a new report about the crypto industry to estimate the true market cap of Ripple’s XRP taking into account its circulating supply. According to this new study, there is a fair chance that the number of the actual market cap for XRP is way smaller than we all thought.

The company used the databases of CoinMarketCap and Ripple’s own to estimate the circulating supply of the token in about 41 billion tokens. However, the main discovery was that about 19.2 billion XRP, almost half of the total amount, could be illiquid or have significant selling restrictions.

From this money, he believes that at least 6.7 billion XRP is held by the co-founder of Ripple Jed McCaleb and that 5.9 billion XRP tokens are pledged to RippleWorks.

Because of this, the XRP market may be considerably smaller than we thought it would be. A lot of it has selling restrictions like what is sold via XRP II, the money services business of the company. However, Messari deemed impossible to track how much Ripple XRP tokens are illiquid or restricted, in fact, which is why it decided to use estimates instead.

All of this would lead the XRP market to be overstated at least $6 billion USD, according to Messari’s report. The figures could be even higher, Messari believes, as the estimates are conservative and XRP trading volumes have fallen a lot recently.

The company has compared the asset to EOS and Litecoin and affirmed that there are people trading less XRP than EOS now, which has a market cap that is 17% of Ripple’s token. This way, it becomes clear that there is a certain exaggeration when calculating Ripple’s XRP total market cap because most of the tokens simply exist but are not in the market.

According to Messari, the company tried to get actual feedback from Ripple and RippleWorks before publishing the material, but the companies were not able to get back to them in time, which restricted some of the conclusions.

The report states that Ripple is not very clear on the methodology that it uses to calculate the trading volume for its asset and that critical data is lacking. Most of the volume from XRP trading, 99%, comes from overseas exchanges, and some of them are suspected of wash trading.

Coindesk, which also reported on this story, received an actual response from Ripple’s PR team, though. The company disputed the findings of the Messari report and affirmed that it was wrong.

According to the official statement, the report had several inaccuracies on how lockups and selling restriction work and the calculation of the market cap was wrong. Ripple officially calculates the market cap by taking the current price X total number of XRP tokens. By this simple calculation, it reaches its official value of market capitalization.

The statement ended by affirming that the Ripple team does not consider any other way to measure the market cap to be a “clear representation of the truth” but this one and stated that the true market cap was $31 billion USD.

Are the reports a proof that people are overestimating how powerful the XRP market is or the company is right in affirming that the whole study is wrong? Let us know and follow our blog for more information about Ripple and the crypto market.

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Gabriel Machado
Brazilian journalist who is interested in the future of the financial world. Has a special interest in the blockchain technology and the global financial markets. Covers economic and technology news with a focus on the fintech industry and has been writing about the cryptocurrency market since the start of 2017.

[Alert] Use the author's self-conducted information at your own risk, do you own research, never invest more than you are willing to lose.

[Disclosure] The published news and content on BitcoinExchangeGuide should never be used or taken as financial investment advice. Understand trading cryptocurrencies is a very high-risk activity which can result in significant losses. Editorial Policy \\ Investment Disclaimer


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