Ripple’s XRP, the seventh largest cryptocurrency by market cap, and XLM — the native token of the Stellar network — are two crypto assets that have been frequently compared in terms of price growth and development. Moreover, both tokens are used to facilitate fast and low-cost cross-border payments.
Ripple CTO David Schwartz shared his observations on the persistent price correlations between XRP and XLM in an X post.
What Drives The XRP Price?
David Schwartz has recently taken to X (aka Twitter) to share a chart illustrating a strong correlation in the price actions of the XRP and XLM tokens.
Schwartz conceded: “I have no idea what factors drive the price of XRP.” This remark might be surprising coming from one of the original architects of the XRP Ledger (XRPL). However, it indicates different market factors could be influencing XRP’s price.
The Ripple CTO astutely observed that “the only real objective data point I have is that XRP tracks the price and market cap of XLM incredibly well over all time frames.”
I have no idea what factors drive the price of XRP. The only real objective data point I have is that XRP tracks the price and market cap of XLM incredibly well over all time frames. pic.twitter.com/Ng2hkSA2wP
— David "JoelKatz" Schwartz (@JoelKatz) August 30, 2024
As of press time, XRP has a market cap of $31.9 billion, compared to $2.7 billion for XLM. Despite the significant market valuation differences, XRP and XLM display similar growth patterns, further fueling the debate about their prices moving in near-perfect tandem.
XRP And XLM Lockstep Movement Deciphered
The correlation observed by Schwartz suggests that investors typically put XRP and XLM in the same mental bucket due to their shared history and intertwined market dynamics, therefore factors driving the price of one of these cryptocurrencies often influence the other.
For the uninitiated, the Stellar blockchain payment project was created by Jed McCaleb, a Ripple co-founder. This link has often been mentioned as a possible reason for the two tokens’ price synchronization.
Nevertheless, the specific explanation for this striking correlation remains a complex and nuanced phenomenon that has long been the subject of much speculation and discussion in the cryptoverse.
At the time of writing, XRP and XLM were mirroring the boring price performance across the border crypto market, trading at $0.5637 and $0.09212, respectively.
