Ripple takes the time to publish markets reports on a quarterly basis to let investors know just how XRP is performing along with regular updates on the state of the market overall. In addition to this, the team publishes quarterly programmatic as well as institutional strategy, sales and relevant XRP related announcements. These include the introduction of Xpring as well as partnerships with RippleNet, and commentary on the previous developments from previous quarters in the market.
As one of the owners of XRP, Ripple has and continues to demonstrate a proactive transparancy along with being a highly responsible stakeholder. Ripple seeks to advise and lead the industry in fostering trust, open communication, allowing them to easily collaborate in providing an industry-wide level of innovation.
Changes to the Volume Benchmark
Over the course of June this year, Ripple announced that the company sales of XRP over the second quarter would be reportedly lower than previously forecasted on account of increasing concerns over mis-reported, false and even inflated trading volumes.
Some consolation to the Ripple team through the fact that it had been working with trusted partners in order to evaluate new and credible sources of legitimate trading volume. Upon concluding this evaluation, Ripple finally decided on the crypto analytics firm CryptoCompare.
Making use of its Top Tier, Ripple then went on to rank various exchanges based on the former's ‘AA,' ‘A,' and ‘B' ratings according to CryptoCompare's Exchange Benchmarking.
This allows for the company to offer a more meticulous look at the various exchanges based on indices for quality, its regulatory environment, management along with structure of exchanges which allows potential users to filter out crypto exchanges for possible unverified volumes.
This kind of additional research wouldn't otherwise be necessary if there were publically available sources on trusted trading volume. The issue is that any kind of thorough system to provide this is still in its relatively early stages. But with the introduction of CCTT, it is a solution that is very much in line with what Ripple regards as being an effective approach of calculating XRP trading volumes.
For the time being, Ripple will be making use of CCTT as a benchmark solution, and will otherwise strive to proactively collaborate with other industry participants with the express purpose of resolving the issue around the unreliable industrial volume data.
Quarter 2 Reports – The Highlights
- Market capitalization of digital assets successfully increased over the quarter, in spite of previous negative forecasting.
- According to Q2 forecasting, Ripple managed to sell more than $251.51 worth of XRP over the second quarter and is working to significantly reduce future sales of XRP.
- Taking into consideration the kind of concerns there are about overstated market trading volumes within certain exchanges, CryptoCompare will be working with Ripple in order to provide an effective primary benchmark for the XRP market volume in the foreseeable future.
- With the latest cryptographic escrow, more than three billion XRP was released, with 2.1 billion being returned to escrow.
- The Q2 forecast found that XRP is now listed on more than 130 exchanges internationally.
Sales Summary –
Institutional direct sales – Q1: 61.93 Million
Q2: 106.87 Million
Programmatic Sales – Q1: 107.49 Million
Q2: 144.64 Million
Total Sales – Q1: 169.42 Million
Q2: 251.51 Million
Global XRP Volume –
Advance XRP – Q1: $595.28 Million
Q2: 1,753.57 (According to CoinMarketCap)
429.51 (According to CryptoCompare Top Tier)
Total Sales as % of The Total Volume – Q1: 0.32%
Q2: 0.16% (Coinmarketcap) / 0.64% (CryptoCompare)
Second Quarter and Future XRP Sales
Over the second quarter of 2019, Ripple managed to sell more than $106.87 million worth of XRP in terms of institutional direct sales and over $144.64 million in programmatic sales.
Summing this all up and the company has managed to sell $251.51 Million worth of XRP over the quarter. Given the fact that Ripple had obtained reports of allegedly inflated volumes, which Ripple took very seriously. So much so that the company announced that it would be temporarily pausing programmatic sales along with imposing limits on institutional sales in order to evaluate the problem during the same quarter.
Upon discovering that the sales of XRP were at a rate that was effectively 50 percent lower compared to previous guidance, reportedly 10 basis points of CoinMarketCap's reported volumes, Ripple announced that it would be resuming XRP sales.
Future Forecasted Sales
Ripple intends to take on a future and more conservative stance on the sales of XRP going into Q3 of the same year. As previously noted, the company has officially traded over benchmarks to CCTT and will be more effectively targetting programmatic sales at 10 basis points of CCTT reported volumes
XRP Sales – Institutional Sales Versus Programmatic
Institutional (Over the Counter) Sales
Ripple's longer term view is that its XRP markets should strive to resemble the traditional Foreign Exchange Markets in terms of performance, efficiency and liquidity. This is a very strong possibility, thanks to the proven use case of XRP as being a global value transfer.
Considering the fact that a large segment of Forex trading takes place on Over the Counter markets. In 2017, Ripple began to provide a licensed subsidiary company known as XRP II, allowing for OTC purchases of XRP to meet the kind of institutional demand. Which is especially good considering the occasions when XRP/USD liquidity become limited.
Over this span of time, XRP listings have managed to increase as Ripple officially partners with the top digital asset brokers along with used inventory in order to operate as a backstop for liquidity in XRP. Having this solution available allows for these OTC liquidity providers to have the ability to source XRP directly, even when the institutional quantities of XRP are otherwise difficult to access across a range of exchanges.
Ripple decided to pull itself back from providing Over The Counter scale for XRP towards the end of the second quarter. This is after finding the OTC desks ability to source institutional demand for XRP within the open market overall. In the foreseeable future, Ripple seeks to put a greater focus on institutional sales in markets where there is a higher level of on-exchange liquidity for XRP is in smaller volumes and is insufficient to meet institutional demand.
Ripple has managed to conduct its programmatic sales of XRP with the underlying goal of reducing the kind of impact that it would have on the market. Just how it managed to do this is through imposing limits on XRP sales through this avenue to what it regards as a small percentage of traded volume, which was substantiated by studies of multiple exchanges.
Ripple has been relying more and more on programmatic sales partners who are mainly involved in executing passive trades; meaning that their own trading volumes don't vary based on any changes in the value of XRP, but they do tend to increase as the overall volume of XRP trade increases.
In a previous segment of this report, thanks to misreported trading volumes, Ripple has effectively changed its overarching sales strategy and benchmarking solutions as it heads into quarter 3 and will be continually monitored in order to prevent this same misreporting from happening again.
Over the second quarter of this year, more than 3 billion XRP were released out of the escrow at a rate of one billion each month. Of this total amount, 2.1 billion of it was returned and directly placed into new escrow contracts.
With the remaining 900 million XRP that was not returned to escrow, it was put to use in a number of ways, all in order to help develop real use cases for XRP. These include the likes of initiatives like XPring as well as partnerships secured with RippleNet which include MoneyGram.
All of these figures were reported based on the number of transactions executed during the same quarter.
According to reports provided by the Ripple team, the overall market capitalization behind digital assets has managed to increase by more than 123% when compared to the first quarter. XRP's price has also managed to increase bt 28.2% over the second quarter, ending the same time at a value of $0.40 according to CoinMarketCap.com
According to the recently used CCTT, the daily volume for XRP managed to increase significantly over Q2. With the average daily volume increasing to $429.51 million in the second quarter over $156.01 million back in the first.
To put that into a broader perspective, according to the CoinMarketCap metrics, the average daily volume of XRP was $1.74 billion.
The Market – Volatility and Correlation
XRP's underlying volatility . over daily returns range over the quarter at around 5.01 percent. And while there was a steady increase . in this volatility back in Q1, XRP was pretty much in line with other major performing digital assets.
In addition to this, the correlation between XRP and Bitcoin dropped compared to Q1, while correlations with other digital assets like Ether remained pretty high and steady.
Performance In Exchanges
Over the latter quarter 2019, Ripple managed to add a further 12 exchanges to its line-up of competing markets trading in XRP. According to the team, this takes the total number of exchanges dealing in XRP to 130 worldwide.
Quarter 2 recorded the highest number of customer based transactions on RippleNet. Over the first half of 2019, the number of transactions using xRapid successfully increased by over 170 percent from Q1 and Q2, and Ripple managed to increase by 30 percent in the number of live xRapid partners in Q2.
According to Ripple, it anticipates that this momentum in number of transaction volume will continue, especially as more partners list XRP and more customers go live.
Most notably, over the second quarter, Ripple announced that it would be securing a new strategic partnership with the money transfer company – MoneyGram (NASDAQ: MGI), which is also one of the world's most popular money transfer companies. What makes this partnership impressive is the fact that MoneyGram operates in a highly lucrative, $600 billion dollar global remittance market, which provides for millions of customers across 200 countries and offering support for a large number of fiat currencies.
With this new partnership, which has an initial term time of 2 years, Ripple will be working as a key partner with MoneyGram for cross-border payments as well as foreign exchange settlement using its digital assets. Along with this partnership, Ripple has since agree to provide an initial capital commitment for MoneyGram, which allows the company to effectively draw on over $50 million in exchange for equity over that same period of time.
While this does involve an initial injection of capital, the partnership with MoneyGram will be specifically focusing on the xRapid product. xRapid itself operates as a solution for on-demand liquidity, which directly leverages XRP as a high-speed and real time bridge between the currencies that are being sent and received.
So what is XPring exactly? It operates as an initiative to provide greater support for an open-source community of developers that are interested in developing and building on the decentralized XRP Ledger and provide meaningful use cases for XRP on that same ledger.
The initiative manages to do this in a couple of ways. The first . being that it support blockchain projects . by helping them to hone their ideas and get them to grow through partnership and investment. The second being by helping to develop the existing crypto infrastrucutre through contributions to its existing protocols such as the Interledger and XRP Ledger.
Along with these more specific measures, Xpring is working to develop a dedicated platform for dApp developers in order to support these open source developers, allowing them to easily leverage these protocols. XPring itself makes its investments using a mixture of conventional currency as well as its own native token.
Any investments that do involve XRP are usually subjected to a number of sales restrictions, and are otherwise intended more for . direct use in the kind of tools, developers and services being created.
Companies, developers of varying scales continue to build on top of the XRP Ledger, while making use of the Inter Ledger Protocol and XRP. Some of the more significant developments from projects and emerging companies that have managed to secure investment and support from Xpring include the following:
Bolt Labs operates as a payment channel network which places a special emphasis on user privacy. Bolt itself manages to secure scale through managing transactions off-chain while preserving the privacy of its users.
Agoric allows developers the accessibility to build their own highly-secure smart contracts as well as new digital assets that can connect to both . public or private blockchain solutions.
Robot Ventures is the odd one out, being a pre and seed invesment company which provides support for . companies in their relatively early stages. Specifically, providing funding and guidance for those involved in the industries of decentralized finance and blockchain technology.
One thing that has helped to shake up the market has been the kind of regulatory activity taking place on account of hearings between Facebook's head of Libra and the United States Senate.
Notable Regulatory Actions
- The United States' Securities and Exchange Commission announced this week that it would be working to establish nodes on decentralized and open source ledgers in order to help inform its policy making towards blockchain and cryptocurrencies.
- The United Kingdom's Financial Conduct Authority attempted to analogize XRP, comparing it to Ethereum, while recognizing that it was a hybrid utility and exchange token as opposed to just being a security token.
Blockchain and Crypto – Enter Big Tech
Some of the relative newcomers into the ecosystem brought with them the pleasant price of increased global awareness and interest in the world of blockchain and cryptocurrency. More specifically, this relates to Facebook's announcement, both that it was creating its own blockchain solution, but also with the publication of the Libra White Paper in June.
It was thanks to this that a significantly increased body of people found themselves intrigued in the prospect of the world's largest social media platform dabbling into the world of blockchain. This is very much similar to the announcement by the multinational financial organization – JP Morgan – specifically that it was beginning the trials for its own dedicated digital asset known as the JPM Coin. This news brought with it greater market validation, illustrating the kind of benefits that blockchain and cryptocurrencies could bring to the world of international payments.
While these two examples brought an increased amount of optimism from an increasing community, Facebook, by contrast, experienced its fair share . of regulatory resistance, with regulatory agencies questioning, with good reason, the capacity of Facebook to comply with the most recent consumer data security laws, as well as the far more stringent anti-money laundering and Know Your Customer Laws.
While Facebook was certainly made an example of over this past month for its new foray, it's not the only tech company out there to announce that it was breaking into the world of crypto and blockchain this quarter of 2019.
- Amazon, for example, was granted a patent which allows it to develop a proof of work cryptographic system in order to combat Denial of Service (DDoS) attacks. It's partnered company – Amazon Web Services also launched its own Managed Blockchain Service as part of its future Blockchain As a Service (BaaS) solution. The latter also provides support for the open-source Hyperledger Fabric, which is accessible for its enterprise-facing clientele.
- Yahoo! Japan also announced that it took its own cryptocurrency exchange live this week. Known as Taotao, the exchange allows for users to have ready access to pairings of Bitcoin and Ethereum along with margin trading for XRP and Litecoin.
- Google also made the announcement that app developers making use of Ethereum that use Google software will be able to fully integrate data from sources originating from outside of blockchain through its earlier partnership with ChainLink.
- Samsung also announced the creation of its own blockchain and potential token, both of which will likely be backed by Ethereum
The Emergence of Institutional Interest
Digital Assets have undergone a relatively unique kind of bullish uptrend this quarter. Having seen an increased level of institutional interest over the same span of time, allowing it to be easily differentiated from other, more consumer-focused bubbles in the crypto market.
Over the last quarter, for example, futures trading and other kinds of derivatives available for the world of crypto gained a far broader prevalence of discussion.
Especially considering the fact that the underlying market capitalization of digital assets increased, CME managed to reach a remarkable new high for its Bitcoin futures contracts, while Bakkt announced its own plans to begin testing for the launch of its own futures contracts.
Banks continue to take a gamble on Crypto and Blockchain
Multinational and well-established banks continue to show, and have since shown a growing interest in the realm of blockchain technology and crypto, especially as they start to take greater aim at creating and launching their own private blockchain solutions and digital tokens.
Over the last quarter, for example, a group of over 14 financial companies, spearheaded by UBS and including major names like Barclays, Santander and the Canadian Imperial Bank of Commerce announced the creation of Fnality International. At its core, Fnality operates in such a way as to aid the continued development and future implementation of its own Utility Settlement Coin with the aim of improving the speed, efficiency and cost-effectiveness of cross-border payments.
JP Morgan, meanwhile, announced the beginning of customer trials of its centralized digital payments utility token known as JPM Coin. For the moment, this is only available for a select number of corporate clients. The Goldman Sachs CEO also stated that the bank in question is also doing its own share of tireless research on the prospect of asset tokenization and stable coins.
Crypto exchanges have also reported a record level of trading volumes and profit, with traditional brokerage firms announcing separate plans at offering cryptocurrency trading for their more traditional clients on varying scales.
Further Regulatory Highlights in Q2
The United States and Europe
- The G20 summit officially announced its full support of the FATF's existing crypto guidelines and ongoing work by the United States Financial Stability Board in order to more effectively explore the implications of leveraging decentralized fintech and just how regulatory bodies can work to better engage stakeholders.
- Hester Peirce, the current commissioner of the Securities and Exchange Commission argued that the current kind of guidance available to users falls short on the need for clarity that the industry needs if it is to move forward and develop additional guidelines as they relate to crypto.
- The French government has also pushed for the European Union to further adopt an effective cryptocurrency framework to achieve uniformity on laws relating to crypto.
- Bitstamp was also recently granted a ‘crypto' license in order to trade in virtual currencies in New York from the City Department of Financial Services
- The Securities and Exchange Commission has also sued the instant messaging company Kik for apparently operating an unregistered sale of securities back in 2017 when it launched an Initial Coin Offering for its native Kin token.
- The United Kingdom's Financial Conduct Authority has since announced a potential ban on the sale of any kind of crypto derivatives to retail investors.
- The Reserve Bank of India has also considered a new law that mandates payments data should not be allowed to leave India, and has also announced a new regulatory framework for its new fintech sandbox initiative that allows blockchain projects to participate in the programme. While also excluding any companies involved in the world of cryptocurrencies.
- Nepal has also announced a ban on AliPay and WeChat Pay. Explaining that they are not officially registered as payment solutions.
- Japan's House of Representatives passed a new framework for crypto regulation in the country's upper house and National Diet (Japan's Bicameral Legislature). The regulation is intended to strengthen regulations and crypto trading practices on a local basis.
- Brazil has established a brand new commission in order to consider crypto regulation across the country. This new commission will officially be composed of more than 34 members in relation with the House's Rules of Procedure. In addition, the country's major financial agencies have since announced the creation of a regulatory sandbox for companies involved in blockchain, Fintech and crypto.
- Chile's government has also introduced a new bill relating to cryptocurrencies for Congress.
Middle East and North Africa
- Egypt's government has announced that it will be lifting its ban, and will be allowing the launch and operation of licensed cryptocurrency companies.
- The Pakistan Central Bank has announced that it intends to develop and launch its own state-backed digital currency by 2025, with the hope of taking its government fully digital by 2030.
Ripple Quarter 2 Market Report In Conclusion
The second quarter of 2019 has been marked with considerably improved regulatory activity, landmark partnerships being struck with major companies along with some serious announcements from new entrants and influential players in the industry.
These particular activities underscore the continued level of maturing that is going on in the blockchain and cryptocurrency markets. Along with this, Ripple has been taking some admirable, highly proactive steps in order to address some of the chronic issues affecting crypto markets such as inflated trading volumes by reducing the future volume of XRP sales and changing its fundamental volume benchmark.