Trader: Ripple’s XRP Sales Are Blown Out of Proportion; Its Inflation Rate is Less than Bitcoin
Trader Credible Crypto in his latest YouTube video tried to debunk XRP FUD. The trader is an XRP enthusiast who unlike many in the crypto space believes the third-largest cryptocurrency by market cap will yet again surge to new highs in the next bull market.
Currently, XRP/USD is trading at $0.204 but continues to make new lows in the BTC market, falling to $0.00002055 on Monday.
However, the trader isn’t concerned about the price as he is confident when the time comes, the best performer of the 2017 bull market will move upwards again.
One of the altcoins that will stick around the longest in this space is going to be $XRP
— DonAlt (@CryptoDonAlt) May 15, 2020
Insignificant XRP Sales by Ripple
Credible Crypto addressed Ripple dumping XRP preventing the digital asset from appreciating in price and for that he took programmatic sales into account.
Ripple sells XRP in two ways, programmatic sales that refer to the XRP sold through exchanges and institutional direct that refers to those done over-the-counter (OTC) to strategic partners.
Also, every quarter Ripple is reducing the amount of XRP sold and Q1 of 2020 was the lowest one ever.
The amount of XRP that Ripple decides to sell on exchanges is based on the global XRP volume.
“When people say that ripple suppresses the price and then they're dumping massive amounts of XRP onto the market it's simply not true,” said the trader.
For instance, in Q2 of 2019, Ripple was accountable for only (.32%) third of a percent of the XRP sales of total volume.
“This small fraction of sales really is insignificant when it comes to price oppression.”
Moreover, they are planning on reducing this to 0.23% to 0.1%, that's a tenth of a percent of one percent of the total volume in billions of dollars worth of XRP traded on exchanges.
This XRP dumping by Ripple peaked at Q2 of 2019 and since then it has been declining significantly.
However, it’s worth noting that though not directly sold by Ripple, the XRP it pays off to its partners is also sold by them. Earlier this month, MoneyGram revealed it received $16.6 million worth of XRP in Q1 of 2020, up from $11.3 million received during Q3 and Q4 of 2019. However, it doesn't hold the digital asset for long but sells them as soon as MoneyGram receives it.
Moreover, former Ripple CTO Jed McCaleb continues to sell millions of XRP in the market. Just last month, he sold 54 million XRP.
XRP has less inflation than Bitcoin
The trader further compared this with bitcoin by taking into account the BTC mined by miners and sold into the market to increase the circulation supply. In a similar manner, inflation occurs for XRP tokens through sales by Ripple which increases the circulating supply.
In the past year, Bitcoin miners sold an estimated $5 billion worth of BTC in the market assuming they hoard only 10% to 20% of the bitcoin mined because they had bills to pay.
However, he also noted that “Bitcoin is bound to have more sales in dollar terms because the market cap is larger.”
As such, he compares the inflation rate — the number of new coins of XRP or Bitcoin introduced to the existing supply.
While Bitcoin already has 18.3 million coins in existence, XRP created 100 billion with 50 billion of them locked in an escrow, and some of them are released every month into the circulation supply but the majority of them are put back into escrow.
Before halving in Q2 2020, bitcoin had a monthly inflation rate of 0.3% and the quarterly inflation rate of 0.875%. In 2019, the quarterly inflation rate of XRP was less than bitcoin’s at 0.7% and it dropped further in the next two quarters of 2019.
The trader also addressed the different nature of blockchains, just like the market value of bitcoin involves production cost and the additional cost derived from speculation potential use of the product, the same manner, although already minted, what’s XRP worth today is the value derived from other aspects. He said,
“The amount of the value that's coming from the cost to produce is one thing but there's another separate amount of value that's coming from other factors and with the factor of the cost value and the fact of these other values you get the final price a day.”